![How to BUY a PUT Option - [Option Trading Basics]](https://blog.bc.game/wp-content/uploads/2019/08/How-to-BUY-a-PUT-Option-Option-Trading-Basics.jpg "How to BUY a PUT Option - [Option Trading Basics]")
Today you’re going to learn what a put option is, when do people use it and why you may want to purchase a put option.
What is a put option?
When you’re buying a put, it means you’re looking for the stock to go down, which means you have a slightly bearish outlook. If you’re a seller of a put, it means you’re looking for the stock to go up, which is bullish. Don’t get those two things confused. In this video, we’re focused on the buying side of a put.
Why would you want to buy a put?
Let’s say you own 500 shares of Netflix. You can hedge or protect that investment by buying a put contract. What you may want to do is buy a new put contract, so that way, if that stock goes down, at least you make a little bit of money on the put.
However, the put contract is not going to replace you getting out of the stock, it’s not going to totally negate your position, it’ll only protect a little small part of it. And ultimately that’s what people do when it comes to trading put option contracts.
Each option contract covers 100 shares. So if you own 500 shares of Netflix for example, you can decide how many of those shares you want to hedge or protect, by buying one, two, three or more put contracts.
In this video, we’re looking at how to buy a put option. We will look at a risk profile picture and what that looks like when it comes to buying a put. Also, we will break it apart and evaluate it for different scenarios.
And finally, we’re going to look at how to buy a put option on a trading platform, where I’ll explain in depth how buying a put option contract works, and what are some of its benefits.
Posted at: http://tradersfly.com/2018/01/buying-a-put-option/
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Great explanation – best video I've found to explain this new world.
Thank you for the simplicity and the cheat sheet and not talking fast. I have been watching several YouTube videos and this is by far the best one and simplest one that helped me understood the basic of option.
damn this is difficult 🙁
what do i need to do to keep from have short position, if i buy put option in security not owned, for example i want to hedge a mutual fund that invest in sp500 by buying put options in spy mutual is owned in ira , I want to purchase put in ira brokerage account.
Silly question why when I buy a call the profit is infinity but when I buy a put it gives me a limit to my profits??? Anyone please and thank you ?
What can I said I've been watching you for a long time . I just want to said thank you . learned a lot over the 4 years .
Not just protection of stocks. Can we not use the put option without owning stocks?
sasha do you have anything more on videos about options?
Well presented information. Great job breaking down the components and bringing clarity to how this option works. Thank you.
This is what I don't understand, in order to sell something, you must first own something. So if you want to sell FB, you must first buy FB before you can sell it.
I am using a Robinhood trading app and have placed a "buy call for Facebook(FB)" for 2 contracts, but when I try to sell them, it did not get executed and during this time waiting, I went back to negative(loss).
I had a put option on the dia on election night. Market down 900 points. Placed a sell order and by the time the market opened it had recovered. Why does it seem like after hours is where all the money is made? Since then I have discontinued buying these out of discouragement. I'm thinking I would like to try again. Put option on the dia. Any tips would be appreciated as I'm just doing this on my smart phone. I was looking at two weeks out buying at 239-237. Still very new to this options narrative.
So what is the risk if i sell a call, let's say, ibm $100 in 30 days?
I wish you would have covered more information about naked put buying. I have sold puts before but I got crushed by holding the stock that was put to me by holding it too long after I took possession of it. Feel like an idiot holding 100 shares of SNAP, I'm down bigtime on that. I should have pick a better company to write a put on.
You seemed interest in your personal experiences, and your teaching isn't a basic at all. Both, so complicated and confused. I'm new here. I don't get a bit you said. Please go to the point. What a Put does and does not, and how to get in and out safely ? Is there any obligation to buy now and get out 5 minutes later ? And, obligated nothing ?
Hey Sasha,
I love you videos .. thanks
if you are going to mess around with ETF's is best to know what stocks are in the Portfolio of the ETF. So you know what sector might take a hit if you are trading options on that ETF. Stick with stocks for now just for training purposes.
Great stuff. I like the way you explain these concepts. Is your free youtube material sufficient to trade options competently? if not, what paid course do you recommend to round out one's knowledge about trading options before attempting to trade them?
I'm all about it with Puts this year. This bubble that the Trump, Trump, Trump rally has created is scary. At some point common sense should kick in and people would realize that stock prices don't go Str8 up without some type of pullback or correction. If consumer spending slows down or anything that spooks this market is going to be bad news for the chaser and good news for the people that are hedging this bubble.
I never understood the strategy of your teaching