Up and in put option as a guarantee
The Equity Strategy Workshop is a collection of discussion pieces followed by interactive worksheets. The workshop is designed to assist individuals in learning how options work and in understanding various options strategies. These discussions and materials are for educational purposes only and are not intended to provide investment advice. Investment decisions should not be made based upon worksheet outcomes. Access to, or delivery of a copy of, the Options Disclosure Document must accompany this worksheet. Today's investors are often confronted with uncertainties about the stock market. During bull markets guarantee might be worried about market corrections, and during bear markets that their stocks could fall further. This uncertainty can lead to reluctance to invest, and strong up moves might be missed. Just like insuring other valuable assets guarantee homes and automobiles, stock positions can guarantee be insured, and this is exactly what a protective put accomplishes. Although not suitable for all investors, buying puts put protect an existing stock position, or simultaneously purchasing stock and puts, can supply the insurance needed for those shares to overcome doubts about the marketplace. Typically, and paying a put premium that is relatively small compared to the market value of the stock, an investor knows that and matter how far the stock drops he has a guaranteed selling option. By exercising the put, underlying shares can be sold at the strike price at anytime until the option expires. Buying a protective put involves buying one put contract for every shares of underlying stock already owned or simultaneously purchased. This put guarantees the owner the right, but not the obligation, to sell the shares at the strike price at any time until the option expires, no matter how low the and declines in value. And just as with other forms of insurance the investor pays a premium for this protection - the premium paid for the put. The protective put's upside profit and is unlimited and long as the price of the underlying stock continues to rise. However, purchasing a protective put in effect increases the purchase price of the stock by the premium paid for the option contract. When the underlying shares are ultimately sold, whether by exercising the put after a stock price decline or by simply selling the shares after a stock increase, the net price received will be the sale price less the put premium paid. The break-even point for this strategy at expiration can be calculated in advance as the stock's purchase price plus the put premium paid. Another benefit of the protective put is that the investor is in total control of the sale of the protected shares. Since the protection provided is a long option position, whether or not the put is exercised, and the underlying shares sold, is entirely up to the investor. If the underlying stock has declined below the put's strike price before it put, and the put is in-the-money with intrinsic value, the put may be sold instead of exercised and the shares retained. Regardless of the investor's decision at option expiration, during the lifetime of option put contract the investor continues to receive any dividends paid to stockholders as long as the underlying shares are owned. TradeStation Voted Best for Options Traders 2 Years in a Row by Barron's. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must option a copy of Characteristics and Risks of Standardized Options ODD. Copies of the ODD are available from your broker or from The Options Clearing Corporation, One North Wacker Drive, SuiteChicago, Illinois The information on this guarantee is provided solely for general education and information purposes and therefore should not be considered put, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and put subject to changes that may not be reflected in the website information. No statement within the website should be construed as a recommendation to buy or sell a security or to provide investment advice. The inclusion of non-CBOE advertisements on the website should not be construed as an endorsement or an indication option the value of any product, service, or website. The Terms and Conditions govern use of this website and use of this website will be deemed acceptance of those Terms and Conditions. My Account Account Settings Sign Out. Equity Option Strategies option Protective Puts. CBOE Put Government Relations Guarantee Relations CBOE Livevol Data Shop Livevol CBOE Media Hub System Status Chinese Language Site Risk Management Conference Careers Advertise with CBOE CBOE. Other CBOE Sites CBOE Futures Exchange C2 Exchange Trading Permit Holders. CBOE Options involve risk and are not suitable for all investors.
Principles of Microeconomics, Eleventh Edition, 9780133024630.
As Pip retell the story of his youth and the life-altering events that causes him to become a wise and mature person, Pip is acknowledging how the changes in his life are not solely relying on a particular person or event.