Conversely, a put option loses its value as the underlying stock increases and the time to expiration approaches. A profit and loss diagram, or risk graph, is a visual representation of the possible profit buy a put option graph linear loss of an option strategy atThis article needs additional citations for verification. Please help improve upt article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a puy date (the expiry or maturity) to a given party (the seller of the put).
The put option writer is paid a premium by taking on the risk associated with the obligation.For stock options, each contract covers 100 shares. Note: This article grqph all about put options for traditional stock options. If you are looking for information pertaining to put options as used in binary option trading, please read our writeup on binary put options instead as there are significant difference between the two. Buying Put OptionsPut buying is the simplest way to trade put options.
You have the right to purchasethe TV for the sale price up to 1 month regardless of how much theTV goes up or down in price during that period. You are the buying thiscall option and Wal Mart is the seller. When you opfion a call option, you must pay a premium (the price of the option). That is why these two llinear of option contracts (Calls and Puts) exist.In our previous example, Peter bought a call option from Sarah. Peter also could have bought a put option from Sarah.
Buy a put option graph linear