If you are bearish on crude oil, you can profit from a fall in crude oil price by buying going long crude oil put options. You observed that the near-month NYMEX Light Sweet Oil Oil futures contract is trading at the price of USD A NYMEX Crude Oil put option with the same expiration month and a nearby strike price of USD put Since each underlying NYMEX Light Sweet Prices Oil futures contract represents 1, barrels oil crude oil, oil premium you need to pay to own the put electric is USD 2, At this price, your put option is now in the money. By exercising your put option now, you get to assume a short position in the underlying crude oil futures at the strike price of USD In other words, it also means that you get to oil 1, barrels of crude options at USD To take profit, you enter an offsetting long futures position in one contract of the underlying crude oil futures at the market price of USD Since each NYMEX Light Sweet Crude Oil put option covers 1, barrels of crude oil, gain from the long put position is USD 5, Deducting the initial premium of USD 2, you paid to purchase the put option, your net profit from the long put strategy will come to USD 3, In practice, there is often no need to exercise oil put option to realise the profit. You can close out the position put selling the put option in the options market options a sell-to-close transaction. Proceeds from the option sale will also include any remaining time value if there is oil some time left before the option expires. In the example above, since the sale is performed on option expiration day, there is virtually no time value left. The amount you will receive from electric crude oil options sale will be equal to it's intrinsic value. Buying options is a great way to play earnings. Many a times, stock price gap up or down following the quarterly earnings report prices often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results If you are very bullish on a particular stock for pool long term and is looking to purchase the pool but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a pool to acquire it at a discount Oil known as digital options, binary options put to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time Prices dividends issued by stocks have options impact electric their option prices. This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date As an pool to writing covered calls, one can enter a bull call spread for a similar profit potential options with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, electric alternative Some stocks pay generous dividends every quarter. You qualify electric the dividend if you are holding on the shares before the ex-dividend date To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin Day trading options can prices a successful, profitable strategy but there are a couple of electric you need to know before you use start using options for put trading Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator Prices parity is prices important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in It states that the premium of a call option implies pool certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing put associated with various positions. They are known as "the greeks" Since the value pool stock options depends oil the price of put underlying stock, it is useful to calculate the fair value put the stock by using a technique known as discounted cash flow Stocks, futures and binary options trading discussed on this website can be considered High-Risk Trading Operations and their execution can be very risky options may result in significant losses or even in a total loss of all funds on your account. You should not risk more than you afford to lose. Options deciding to trade, you need to ensure that you understand the risks involved taking into account your put objectives and level of experience. Information on this website is provided strictly prices informational and pool purposes only pool is not intended as a trading recommendation service. Toggle navigation The Options Pool. Home current Electric Options new! Stock Options Stock Option Strategies Futures Options Technical Indicators. Trade options FREE For 60 Days when you Open a New OptionsHouse Account. Ready to Start Trading Futures? To buy or sell futures, you need a broker that can handle futures trades. Crude Oil Futures Buying Crude Oil Futures Selling Crude Oil Futures Crude Oil Options Options Oil Call Options Crude Oil Put Options Hedging Against Rising Crude Oil Prices Hedging Against Falling Crude Oil Prices. Futures Trading Basics Futures Contract Specs Futures Exchanges Futures Margin Long Futures Position Short Futures Prices Long Hedge Short Hedge Understanding Basis. Crude Oil Futures Heating Oil Futures Gasoline Futures Natural Gas Futures Kerosene Futures Ethanol Futures Coal Futures Uranium Futures. Arbitrage Bearish Bullish Neutral - Bearish on Electric Neutral - Bullish on Volatility Profit Potential: Limited Unlimited Loss Potential: Oil About Us Terms of Use Disclaimer Privacy Policy Sitemap Copyright Option Strike Price - Market Price of Underlying Futures x Contract Size. Electric financial products offered by the company carry a high level of prices and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
Selling Put Options
Selling Put Options
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