Buy To Open Put Example [WORKING]

Your maximum risk is capped. You simply lose the $200 you paid to open the position. Why Traders "Buy to Open" Puts

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

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 maximum risk is capped

If you hold until expiration, the option expires worthless, and you lose your $200 premium. 3. The "Wrong" Call (Stock Rises) The stock rallies to $110 . the option expires worthless