Hi my name is Imran Lakha and I am a trader-turned-teacher. This quick video tutorial is a follow-on from my last upload, 'What Are Call Options?'.
The following points are covered:
A Put is the right, but not the obligation, to sell an underlying at a fixed price (strike) at a given maturity date
Positive payoff is on the downside. It is a BEARISH position if you buy a put.
You can consider Puts as an insurance against your portfolio (pay insurance premium)
If the 100 Strike Put costs 5, then breakeven = strike - premium = 95.
You start to make PNL below 95 in the stock
The demand for portfolio insurance creates a natural demand for downside puts in the market
Please feel free to ask me any questions in the comments.
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