23 lines
1.7 KiB
Plaintext
23 lines
1.7 KiB
Plaintext
INTRODUCTION
|
||
A put option gives the holder the right to sell the underlying security at the striking
|
||
price at any time until the expiration date of the option. Listed put options are
|
||
slightly newer than listed call options, having been introduced on June 3, 1977. The
|
||
introduction of listed puts has provided a much wider range of strategies for both
|
||
conservative and aggressive investors. The call option is least effective in strategies
|
||
in which downward price movement by the underlying stock is concerned. The put
|
||
option is a useful tool in that case.
|
||
All stocks with listed call options have listed put options as well. The use of puts
|
||
or the combination of puts and calls can provide more versatility to the strategist.
|
||
When listed put options exist, it is no longer necessary to implement strategies
|
||
involving long calls and short stock. Listed put options can be used more efficiently
|
||
in such situations. There are many similarities between call strategies and put
|
||
strategies. For example, put spread strategies and call spread strategies employ sim
|
||
ilar tactics, although there are technical differences, of course. In certain strategies,
|
||
the tactics for puts may appear largely to be a repetition of those used for calls, but
|
||
they are nevertheless spelled out in detail here. The strategies that involve the use
|
||
of both puts and calls together - straddles and combinations - have techniques of
|
||
their own, but even in these cases the reader will recognize certain similarities to
|
||
strategies previously discussed. Thus, the introduction of put options not only
|
||
widens the realm of potential strategies, but also makes more efficient some of the
|
||
strategies previously described.
|
||
244 |