Buy To Open Put Example -

If you already own 100 shares of XYZ, buying this put acts as an insurance policy. No matter how low the stock falls, you are guaranteed the ability to sell at $95.

Your right to sell at $95 is now very valuable. The option is worth at least $15 per share ($95 strike - $80 market price). buy to open put example

The contract is now worth $1,500. After subtracting your initial $200 investment, your profit is $1,300 . 2. The Hedge (Stock Stagnates) The stock stays flat at $100 . If you already own 100 shares of XYZ,