Where to buy put options

Here are some of our favorite online stock brokers to get you started. The strike price of a put option is the price at which you can sell your underlying securities. With a put option, the buyer has a right to sell shares of stock at the strike price — before expiration. Choosing the strike price is 1 of 2 crucial decisions you need to make. The other is the expiration date. In practice, there are standard strike prices for securities with the active options market. This way, you may earn some income by collecting the premium paid for those options.

Your trading style should guide your choice of expiration date. It sets the timeframe for when you can buy or exercise the options contract, therefore, fulfilling your obligation. Expiration dates may range from weeks to months to years. Daily and weekly put options are risky and best suited for experienced options traders.

Long-term investors can choose monthly or yearly expiration dates since they give your stock more time to move. Each options contract represents shares of a particular stock. Monitor stock prices to see if they move in the direction you predicted when you bought them.

Most brokerages let you set alerts to notify you when stocks move below a certain price. You can exercise your options contract at any time prior to its expiration date. How do you buy put options? How many contracts should you buy?

Depending on the amount of support you need, you can choose either a discount or full-service broker. Low commissions are just a fraction of what you need to consider when choosing the best broker for options trading.

Consider your trading style as well as the features that are important in maximizing your profits. Research multiple brokerages to better understand the services offered by each. Watch tutorial videos, take lessons, download books and track the world news. So step up and explore! The only problem is finding these stocks takes hours per day.

Fortunately, Benzinga's Breakout Opportunity Newsletter that could potentially break out each and every month. You can today with this special offer:. Click here to get our 1 breakout stock every month. Looking for the best options trading platform? Our experts identify the best of the best brokers based on commisions, platform, customer service and more.

Read More. Looking to trade options for free? Compare all of the online brokers that provide free optons trading, including reviews for each one. Discover the best paper trading options platforms for beginner to pro-level traders. Picks are based on interface, user experience, market quotes and more. Learn how to trade options. Both of those statements infer that your investments can only grow in value when the market is rising. But what if there were ways for you to potentially make money, even when the market is bearish?

Turns out, there are. And one of those ways is called a put option. Simply put pun intended , a put option is a contract that gives the option buyer the right — but not the obligation — to sell a particular underlying security e.

Buying put options can be a way for a bearish investor to capitalize on a downward move in the underlying asset.

But if you buy too many options contracts, you could actually increase your risk. Options may expire worthless, and you can lose your entire investment. The Greeks , a series of handy variables, may help you better position yourself accordingly when you utilize them. Put options are basically the opposite of call options , which give the option buyer the right to buy a particular security at a specified price any time prior to expiration.

You can buy put options contracts through a brokerage, like Ally Invest , in increments of shares. Non-standard options typically vary from the share increment. Pro tip: When the market price of your underlying stock falls below break-even the strike price minus the premium you paid, excluding commissions , it is profitable.

This trade is known as a long put strategy. Like call options, specific strategies exist for put options. Some of the more common strategies include protective puts , put spreads, covered puts and naked puts. A protective put also known as a married put lets you shield the securities you own from price declines.

How so? You continue to hang onto your existing shares taking a long position , while also having put options, which can be thought of as an insurance policy or a hedge against price declines. Since potential growth of a stock is limitless, you can say that the profit potential of a protected put is also limitless, minus the premium paid. There are two types of put spreads: bull put spreads and bear put spreads.

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Put options are the lesser-known cousin of call options , but they can be every bit as profitable and exciting as their more popular relative. Puts and calls are the two basic types of vehicles used in strategies surrounding options trading. This article provides an overview of why investors buy and sell put options on a stock, and how doing so compares to short-selling the stock directly. Options are a type of financial instrument known as a derivative because their value is derived from another security, or underlying asset.

Here we discuss stock options, where the underlying asset is a stock. For this option to sell the stock, the put buyer pays a "premium" per share to the put seller. Each contract represents shares of the underlying stock.

If you think the market price of the underlying stock will fall, you can consider buying a put option compared to selling a stock short. If you think the market price of the underlying stock will stay flat or move up, you can consider selling or "writing" a put option. For a put buyer, if the market price of the underlying stock moves in your favor, you can elect to "exercise" the put option or sell the underlying stock at the strike price.

American-style options allow the put holder to exercise the option at any point up to the expiration date. European-style options can be exercised only on the date of expiration. Buying and selling put options can be used as part of more complex option strategies. Put options can function like a kind of insurance for the buyer. A stockholder can purchase a "protective" put on an underlying stock to help hedge or offset the risk of the stock price falling because the put gains from a decline in stock prices.

But investors don't have to own the underlying stock to buy a put. Some investors buy puts to place a bet that a certain stock's price will decline because put options provide higher potential profit than shorting the stock outright. The buyer has two choices: First, if the buyer owns the stock, the put option contract can be exercised, putting the stock to the put seller at the strike price.

This illustrates the "protective" put because even if the stock's market price falls, the put buyer can still sell the shares at the higher strike price instead of the lower market price.