The Practical Way

Buying Puts

Buying a put gives you the right to sell the underlying stock at a set price (the strike price) by a specified date (the expiration date). Your maximum loss with a put is limited to what you pay for the option up front (the premium).

Buying put options is a great way to profit from a stock’s fall while putting less of your cash at risk. In addition, you can buy puts to protect a stock – one that you’re bullish on for the longer term – from a near-term price drop. Buying protective puts can also help make your portfolio immune to a market crash.[...]

Buying Calls

Buying (“buy to open”) call options is a lot like purchasing stock: You believe that a company you understand well will grow in value over a certain period of time, and you want to generate a profit from it. When you buy a call, you have the right to buy the underlying stock at a set price (the strike price) by a specified date (the expiration date). If the stock price goes up, the value of its calls will too.

In theory, there’s no limit to how high a stock price can go — and in turn, call options can have unlimited profit potential.[...]

Options Glossary

American style: Options contracts that can be exercised at any time after purchase and before the expiration date.

Assignment: When the options writer (also called the seller) is forced to buy (for a put writer) or sell (for a call writer) the underlying stock. Essentially, your counterparty has exercised its option contract, which you wrote, to buy or sell the underlying stock.

At-the-money: An option whose underlying stock is trading at its strike price.

Bearish: An options strategy (and outlook) that achieves its maximum payoff when the underlying stock drops in price. For example, if you are bearish on a stock you know well, you could buy a put or a bear put spread.[...]

Introduction to Options

Why Options?

Options are excellent tools for generating income, protecting profits, hedging, and, ultimately, earning outsized gains. They can generate returns in flat markets, cushion the blow of down markets, and be outstanding performers in decent markets. Whatever your investment goals, options can be a powerful addition to your portfolio, used to hedge, to short, to produce income, and to obtain better buy and sell prices.

What Are Options?

Stock options formally debuted on the Chicago Board Options Exchange in 1973, although option contracts (the right to buy or sell something in the future) have been around for thousands of years. An option gives the holder the right, but not the obligation, to buy or sell an underlying stock at a set price (the strike price) by a set date (the expiration date). The option contract allows you to profit if a stock moves in your favor before the contract expires. Not all stocks have options, only those with enough interest and volume. There are only two types of options: calls and puts. A call appreciates when the underlying stock rises, so you buy a call if you are bullish on that company. A put appreciates when a stock declines. You buy a put if you believe a stock will fall or to hedge a stock that you already own.[...]

Quotes Oscar Wilde

A cynic is a man who knows the price of everything but the value of nothing.
— Oscar Wilde

A dreamer is one who can only find his way by moonlight, and his punishment is that he sees the dawn before the rest of the world.
— Oscar Wilde

A gentleman is one who never hurts anyone’s feelings unintentionally.
— Oscar Wilde

A little sincerity is a dangerous thing, and a great deal of it is absolutely fatal.
— Oscar Wilde

A man can be happy with any woman, as long as he does not love her.
— Oscar Wilde

Quotes Paulo Coelho

Be brave. Take risks. Nothing can substitute experience.
— Paulo Coelho

Beauty is the greatest seducer of man.
— Paulo Coelho

Every blessing ignored becomes a curse.
— Paulo Coelho

Everything that happens once can never happen again. But everything that happens twice will surely happen a third time.
— Paulo Coelho

If you start by promising what you don’t even have yet, you’ll lose your desire to work towards getting it.
— Paulo Coelho

Life was always a matter of waiting for the right moment to act.
— Paulo Coelho

Quotes Thomas A. Edison

Anything that won’t sell, I don’t want to invent. Its sale is proof of utility, and utility is success.
— Thomas A. Edison

Be courageous. I have seen many depressions in business. Always America has emerged from these stronger and more prosperous. Be brave as your fathers before you. Have faith! Go forward!
— Thomas A. Edison

Being busy does not always mean real work. The object of all work is production or accomplishment and to either of these ends there must be forethought, system, planning, intelligence, and honest purpose, as well as perspiration. Seeming to do is not doing.
— Thomas A. Edison

Discontent is the first necessity of progress.
— Thomas A. Edison

Everything comes to him who hustles while he waits.
— Thomas A. Edison

Quotes John D. Rockefeller

A friendship founded on business is better than a business founded on friendship.
— John D. Rockefeller

Charity is injurious unless it helps the recipient to become independent of it.
— John D. Rockefeller

Competition is a sin.
— John D. Rockefeller

Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.
— John D. Rockefeller

Don’t be afraid to give up the good to go for the great.
— John D. Rockefeller

Don’t blame the marketing department. The buck stops with the chief executive.
— John D. Rockefeller

Quotes Bono

As a rock star, I have two instincts, I want to have fun, and I want to change the world. I have a chance to do both.
— Bono

Books! I dunno if I ever told you this, but books are the greatest gift one person can give another.
— Bono

Distance does not decide who is your brother and who is not. The church is going to have to become the conscience of the free market if it’s to have any meaning in this world – and stop being its apologist.
— Bono

It’s so sweet, I feel like my teeth are rotting when I listen to the radio.
— Bono

It’s stasis that kills you off in the end, not ambition.
— Bono

Music can change the world because it can change people.
— Bono

Quotes Arnold Schwarzenegger

Bodybuilding is much like any other sport. To be successful, you must dedicate yourself 100% to your training, diet and mental approach.
— Arnold Schwarzenegger

Failure is not an option. Everyone has to succeed.
— Arnold Schwarzenegger

For me life is continuously being hungry. The meaning of life is not simply to exist, to survive, but to move ahead, to go up, to achieve, to conquer.
— Arnold Schwarzenegger

Help others and give something back. I guarantee you will discover that while public service improves the lives and the world around you, its greatest reward is the enrichment and new meaning it will bring your own life.
— Arnold Schwarzenegger

I am a big believer in education, because when I grew up in Austria – when I grew up in Austria I had a great education. I had great teachers.
— Arnold Schwarzenegger