The put increases in value (or allows the sale at the strike), offsetting the losses on your actual shares.
AI responses may include mistakes. For financial advice, consult a professional. Learn more buying a put option would protect you from
The primary reason investors buy puts is to hedge against a drop in a stock's value. If you own 100 shares of a company at $50 and buy a put option with a $45 strike price, you have guaranteed that you can sell your shares for at least $45. Even if the stock crashes to $10, your exit price is locked in. 2. Market Volatility and "Black Swan" Events The put increases in value (or allows the
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