Selecting a Put

When you buy a put option on a stock, you are taking the view that the stock is going to fall in price. You buy a put option instead of shorting the stock to give yourself more leverage for a greater profit.

The preceding examples illustrating the thought process in selecting a call option carry over to analogous examples for selecting a put. Different strike prices would be used for the corresponding puts, because an out-of-the-money put means the strike price is below the stock price, whereas an in-the-money put means the strike price is above the stock price.

Example 3 could be based on an Apr 65 put with similar option prices and profits resulting from analogous stock price movement down rather than up.

Examples 4 and 5 could ...

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