The Practical Way

Friday, 23rd July 2010

Buying Puts

Written by George Traganidas Topics: Options, Wealth Building

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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.[...]

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Friday, 23rd July 2010

Buying Calls

Written by George Traganidas Topics: Articles, Options, Wealth Building

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Fool.com
By Nick Crow
August 12, 2009

Why buy calls:

• You believe a stock has a strong catalyst for appreciation over the coming months or few years.
• You want to benefit from a stock’s upside, but put less capital at risk than buying the stock outright.
• You want to leverage your bullish expectations on a stock you already own.[...]

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