Showing posts with the label long-put-option


THE OPTIONS COURSE SHORT PUT A short put strategy offers limited profit potential and limited, yet high  risk. It is best placed in a bullish market when you anticipate a rise in  the price of the underlying market beyond the breakeven. By selling a  put option, you will receive the option’s premium in the form of a credit  into your trading account. The premium received is the maximum re ward for a short put position. In most cases, you are anticipating that the  short put will expire worthless. A short put strategy creates a risk profile that slants  downward from right to left from the limited profit. Notice that as the  price of the asset falls, the loss on the short put position increases (until  the price of the underlying stock hits zero). Additionally, the profit is lim ited to the initial credit received for selling the put. When the underlying  instrument’s price rises, you make money; when it falls, you lose money.  This strategy provides limited profit p