Buying puts allows you to sell or put the stock to someone else at the strike price you have purchased.
FORBES: Options Strategies For When Your Love For A Stock Fades
This strategy has limited risk: If the stock climbs to the sky, you simply deliver your shares at the strike price to fulfill the contract.
However, the primary point from a risk management perspective is: am I comfortable selling the stock at the strike price plus the premium received?
Or, even better, I could turn around and sell an AAPL put, which obligates me to purchase AAPL at the strike price of the contract in the event I get assigned.
In simple terms, you can exercise your right to purchase the stock at the strike price (call away) with a Call and you have the right to sell the stock at any time (put to someone) at the strike price at any time by purchasing a Put.
One investor looked to the September contract and shed 4, 500 puts at the September 30 strike price for a premium of 55 cents in order to finance the purchase of 4, 500 calls at the higher September 35 strike at a cost of 45 cents per contract.
Stock options give holders the right to buy shares at a specified price, known as the strike price.
WSJ: Oracle's Ellison Tops List of 25 Highest Paid CEOs of Decade
Notable bullish call buying was seen at the August 150 strike price where more than 1, 000 calls were scooped up for an average premium of 3.56 apiece.
Other optimists opted to pick up 10, 000 calls at the nearer-term September 26 strike price at a price of 95 cents each.
The trader sold 100, 000 puts short at the September 9.0 strike price for a premium of 35 cents apiece in order to finance the purchase of 50, 000 puts at the July 12 strike for 84 cents per contract.
In the case of the oil company, for instance, the cost of land corresponds to the premium (or down-payment) on a call option, and the extra investment needed to start production to its strike price (at which the option is exercised).
Mr. Jackson's bet: that, because the strike price entitled an investor to own Kimberly-Clark shares at a price lower than the stock's current market price, the investor who bought the call options would exercise the contracts before the ex-dividend date to capture the company's 60 cent-a-share payout (recently increased to 66 cents).
WSJ: Running With Scissors: Another Way Dividends Can Boost Your Stock Portfolio
Options are generally granted for a seven-to-10-year period at a strike price equal to the share price on the grant date.
WSJ: Oracle's Ellison Tops List of 25 Highest Paid CEOs of Decade
Moreover, he predicts that "the UK government's strong commitment to nuclear power and to energy security means the 'strike price' will be set at a fair level to secure investment in the nuclear industry".
The other dinosaur den is financial options--the equivalent of the right, for example, to buy Treasury bond futures at a certain strike price--where traders hang over the railings, screaming and waving frantically.
Trading traffic is heaviest in the front month where investors are picking up out-of-the-money calls at every available strike price.
FORBES: Rumors Spur Fever In Alcoa Options, Speculation In CECO
This means that you are selling someone else the right to buy it at a stated strike price on or before a future date.
If the underling price is closer to the strike of the purchased put then losses will occur at a faster rate as time passes.
However, if the underlying is nearer the price of the lower strike on the written put then profits will expand at a faster rate as time passes.
Last year they tried to hold a public hunger strike in protest at the government's decision to raise the price of petrol overnight by 1, 600%.
These breakeven points are arrived at by adding and subtracting the price paid for the long straddle to and from the strike price.
Transport workers in Bolivia have begun an indefinite strike, called in protest at an increase of more than 70% in the price of fuel.
At Gatwick, the CAA said it would prefer to strike a deal with the airport operators on price, but proposed a cap of inflation plus 1% as a back-up.
应用推荐