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5 Options Trading Strategies For Beginners – Bankrate.com

Here’s the earnings on the long put at expiration: In this example, the put breaks even when the stock closes at choice expiration at $19 per share, or the strike cost minus the $1 premium paid. Below $19 the put increases in value $100 for each dollar decline in the stock. best options trading platform. {keywords}.

The benefit on a long put is almost as good as on a long call, due to the fact that the gain can be multiples of the option premium paid. A stock can never ever go below zero, topping the advantage, whereas the long call has theoretically limitless advantage. Long puts are another easy and popular method to bet on the decrease of a stock, and they can be more secure than shorting a stock ({keywords}).

Options Trading Strategies For Beginners - Thestreet5 Options Trading Strategies For Beginners – Bankrate.com

If the stock closes above the strike cost at expiration of the alternative, the put ends worthless and you’ll lose your investment. {keywords}. A long put is an excellent choice when you expect the stock to fall substantially prior to the choice expires ({keywords}). If the stock falls only slightly listed below the strike cost, the choice will remain in the cash, however might not return the premium paid, handing you a bottom line ({keywords}).

Short put, This strategy is the flipside of the long put, but here the trader sells a put described as “going short” a put and anticipates the stock cost to be above the strike price by expiration – {keywords}. In exchange for selling a put, the trader receives a money premium, which is the most a brief put can earn.

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The Basics Of Trading Options Contracts - Dummies5 Options Trading Strategies For Beginners – Bankrate.com

Stock X is trading for $20 per share, and a put with a strike cost of $20 and expiration in four months is trading at $1 ({keywords}). The contract pays a premium of $100, or one contract * $1 * 100 shares represented per contract. Here’s the earnings on the brief put at expiration: In this example, the brief put breaks even at $19, or the strike rate less the premium got.

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In between $19 and $20, the put seller would earn some but not all of the premium – {keywords}. The advantage on the short put is never more than the premium received, $100 here ({keywords}). Like the brief call or covered call, the optimum return on a short put is what the seller gets upfront ({keywords}).

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