Options Trading Crash Course: Quick Start Guide For Beginners To Learn Risk And Reward. Overcome Fear And Anxiety In Stock Market Investing Through The Best Passive Income Strategies by George Greek

Chapter 1. Master the Basic Nuts and
Bolts of Options Trading (Buy or Sell Calls
and Puts)
Buying and Selling Puts
Let’s talk about buying and selling puts. Puts, of course, allow you to sell
the stock that you have or the underlying commodity that you have
underneath it all. There are different reasons why people may want to buy
or sell puts, and here we’ll go over what it is, how to do it, and the
advantages of such.
What is Buying and Selling Puts?
Selling/buying puts essentially is giving someone the option to buy the
stock at a certain amount of money.
If you sell a put option, you’re selling the chance for someone to buy that
stock at a price.
If you buy a put option, you’re giving someone the option to buy that stock
for that price and the person is obligated to sell it.
So, let’s say that you’re planning on getting a put option to buy that stock at
a certain amount of money. You can put that option down, and from there,
wait for it to fall, and from there you can exercise it. Maybe you want to
buy shares from a really good railroad company. You essentially notice it’s
increasing the earnings on this, and you decide to buy the stock when it’s
below 30 potentially. By buying a put option, it basically makes the seller
obligated to sell you the stock when it falls below 30 dollars.
You want to exercise these in falling markets since you’ll generate a profit
when the market is falling, rather than rising.
Selling Puts in this Market
Here’s the thing, when you want to sell puts, you should only do so if
you’re comfy with owning a stock that’s under its actual price, because
essentially, you’re assuming the obligation to buy it if the person does
decide to sell. From this, you should also only enter trades where the net
price paid for the security is good. This is the most important part of selling
puts profitably in the markets that you have. There are other reasons to sell
it to the person. You can also own the security below the market price that
is currently there, and you’ll definitely want to be careful when you do
choose to sell this.
An Example of Buying a Put
Let’s now move onto buying these puts. One thing to note is that you’re not
going to see the commissions, taxes, margins, and other charges factored
into any of these equations for a reason. That starts to get it a bit more
complicated, and right now, we are just showing you the cut and dry of all
of the ways you can buy a put option that can be considered. But you
should definitely consult with your tax advisor or broker before you go in.
So, let’s say you’ve got company A, which is overvalued currently at $50
bucks a share, and you decide to bet on a decline at this point, getting a put
contract that’s at $35 a share, and it costs $2 per share, so the “breakeven”
price is $33 a share. This is deduced from basic math since you’re taking
the contract price of 35 minus the 2 making it $33 for this. Since each of
these represents 100 different shares. That’s $3500 in total of what you’ll
buy, and then of course it’ll cost you upfront $200 for this (cause of the
options contract and the shares) and from there, you enter the trade. Now,
let’s say that the option contract is for August 2019, and from there, you
fast-forward and watch the market. Below is a table of what can happen.

Options Trading Crash Course: Quick Start Guide For Beginners To Learn Risk And Reward. Overcome Fear And Anxiety In Stock Market Investing Through The Best Passive Income Strategies by George Greek