Buying Puts This is the third webcast in our series on stock options. In the prior session, we discussed buying call options. This time, we are going to discuss buying put options.
Puts are basically the mirror image of calls.
When you buy a call, you pay a premium for the right, but not the obligation, to buy a stock at a certain specified price, known as the strike price, until a specified date, known as the expiration date. When you buy a put, you pay a premium for the right, but not the obligation, to sell a stock at the strike price. Calls are bullish because you make money if a stock rises. Alternatively, puts are bearish. This is because if a stock falls below the strike price, the value of the put will rise and you will make money.