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| Topic | Stock Topic 25 |
| red sox 777 03/24/21 11:45:11 PM #485: | If you buy calls, you get the right to buy the stock. If you buy puts, you get the right to sell the stock. You can buy puts on a stock you own as insurance. For instance, say I own PTON, I bought it at $100, and want to limit my downside on PTON without limiting the upside. I can buy a put at $100 strike for Jan 2022 for about $22. Then if the stock is trading below $100 in January 2022, I can exercise my put and sell the stock for $100. My maximum loss is $22, which is achieved with a share price at $100 or anywhere below. I break even at $122, and above that my profit is $22 less than it would have been if I didn't buy the put. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest! ... Copied to Clipboard! |
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