Buying Put Options Basics + Robinhood Demo in 10mins (Beginner-friendly)

🙋🏻‍♀️ Join my Discord community / discord
This video is tailor-made for beginners to explain BUYING PUT OPTIONS (with Robinhood Demos), all in 10 mins. If you just started option trading, this would be the best video to go for. I will walk through what it is, how it works, and give you a demo on both good and bad scenarios, without confusing graphs and maths.
► Free $5 on Cash App
The easiest way to send, spend, bank, and invest stocks and bitcoins
cash.app/app/GRMJLXS
► 1 Free Stock on Robinhood
Sign up. No deposit required, and Get 1 free stock (valued up to $200):
join.robinhood.com/zhendol
► 2 Free Stocks on WeBull
Sign up. Deposit $100, and Get 2 free stocks (1 of them valued up to $2000):
act.webull.com/promotion/join...
If you're interested in more option trading tutorials, here are the rest:
► Buy Call: • Buying Call Options Ba...
► Buy Put: • Buying Put Options Bas...
► Sell Call: • Selling Call Options B...
► Sell Put: • Selling Put Options Ba...
🔴 Subscribe for more useful tutorials just like this: kzbin.info?sub...
Questions? Drop a comment! Cheers mate!
No merch.
No courses.
No Patreon.
Just a practical guide.
Music: Joakim Karud / joakimkarud
#optiontrading #buyput #robinhood

[@EduardoArceSD]

Amazing video. Well explained, great example, great visuals. Thank you, helped so much.

[@Justeen15]

Thanks Eduardo! Glad to hear it's helpful for you :)

[@RD-jp4zs]

I have been watching about 50 different videos on this subject. I am so glad I found videos like yours to comprehend. Thank you very much.

[@Justeen15]

Hey! Thank you so much! Out of curiosity, what in this video that you find the most helpful? vs the other 50 you saw haha?

[@RD-jp4zs]

@@Justeen15 Your videos on selling puts and buying puts. After watching videos after videos, I am starting to grasp option trading. Unfortunately it's baby steps. Hopefully I can become better after a few months of trial and error. Awesome videos I highly recommend.

[@Justeen15]

@@RD-jp4zs Haha yeah it takes time to grasp for sure. Let me rephrase my question: any thing in particular in my put videos that help you understand the concept better? the visualization? the graphic? the robinhood screenshots? the contract metaphor? the silly humor :)? And do you now get how puts work and how to buy and sell puts?

[@RD-jp4zs]

@@Justeen15 Yes I finally understand how puts and call works. But I am still making mistakes trying to hit a grand slam by buying a call on META last week. Watched in horror as the stock dropped 70 bucks :( Your videos and Jake Broe videos are very easy to follow but I still have to watch it a few times because I don't want to miss any info. You are the only 1 i noticed that uses the graphics from robinhood and show the option contract right next to it. You also talk about to selling the contract instead of exercising it.

[@JayAlvarez]

Yes!!! I've been looking for a breakdown like this for days! Thank you for the practical breakdowns, that's everything I needed to wrap my mind around all this. You earned the like!

[@Justeen15]

Thank you Jay! Hope that's useful! More finance videos to come :)

[@vinod2999]

This is my 7th Video watching, trying to understand "Buying Put Options". Finally this is the one.

[@Justeen15]

Amazing! Thank you! Love to hear your feedback: anything specific in this video help you understand buying put that other videos didn't?

[@tiptea8145]

Best explanation down to earth on KZbin! Great presentation. Thank you!

[@Justeen15]

Thank you so much! If you have other finance topics you want me to cover, let me know! :)

[@SterlingStocks]

great video very well explained. ive been watching so many vids on puts you made it clear! excellent video my friend!

[@Justeen15]

Thank you thank you! More videos to come!

[@anishmahat9522]

Thank you man . I have been looking for a video that explains Put without having to exercise it. YOur video helped a lot

[@Justeen15]

Thank you! Yeah! All the ones I watched only talked about the theoretical gain from exercising, which is not the only way! Glad the video helps :)

[@Circleback29]

This video and your visuals really got me through a difficult moment! Thank you for connecting the dots so eloquently! I followed you and hope to use your videos as a resource!

[@Justeen15]

Thank you so much! Out of curiosity, what are some of the things that this video helped you understand that other videos didn't? What was the breakthrough moment for you that you were like "aha! I got it now!"?

[@gatetres]

Justeen is really the best option teacher than any OP-Pros on YT ...

[@Justeen15]

Thank you! I just try to explain these finance terms from people's perspective, aka with design :)

[@zombie18g]

Thank you this video was a lot more helpful than any other video I seen

[@Justeen15]

Thank you! If you have other finance video topic you want to learn, let me know! I will plan accordingly :)

[@MrCarlnatalizia]

Excellent job at making the complex simple. Thank you

[@Justeen15]

Thank you thank you! Your comment certainly made my hard work worthwhile :)

[@cesarpolanco9024]

I have watched many videos and this has been the best explanation for Buying puts. Keep up the great work. I also subscribed to your Channel

[@Justeen15]

Hey César! Thanks for the kind words :) are there any finance/trading topics you want to see in future videos?

[@wiegehts829]

Thanks for taking the time to make this video. You’re right, other people just focus on exercising the contract and don’t thoroughly explain the concept behind selling the put option contract. Much appreciated!

[@Justeen15]

Yep! I want to explain more thoroughly so it makes more sense :) are there any other topics you want me to cover in the future?

[@wiegehts829]

@@Justeen15 I’m really enjoying your channel! I appreciate your approach to educational investment videos by drawing on your background as a designer. It’s a unique approach I haven’t seen before. I would encourage you to continue making investment videos that are easy to understand and fun to watch. I think you’re wonderfully equipped to help people understand some harder to grasp investment concepts (maybe even some technical analysis).

[@Justeen15]

@@wiegehts829 That's really great to hear! Exactly what I am trying to do! simplify investing with my design skills :) Stay tuned. More videos to come!

[@lionmapuatuli7930]

Thank you for the video easy to follow and understand more clearly. I just started PUT option trading so this video definitely helps understand PUT option trading more thank you again for your time to make this video!!!

[@Justeen15]

Thanks for supporting! If you want to see how a put will play out over time, I make a live demo for it: kzbin.info/www/bejne/npSug6GjbqmaiK8

[@siliconvalley_degen5423]

Best video I seen yet!! Thanks

[@Justeen15]

Thank you! I have another buy put live demo video in my channel too if you want to check it out :)

[@hoshangsarwary2470]

Thank you for sharing your knowledge in a very clear way 🙏

[@Justeen15]

Thank you! Let me know if you have any topics you want to see in future videos!

[@olo290]

This is really an Excellent video. Thank you Justeen!!

[@Justeen15]

Thank you! Do you have any other lingering questions on buying puts?

[@sashaliss2962]

Great educational video, learned a lot! Thanks

[@Justeen15]

Thanks Sasha!

[@jesusquintero3704]

Thank you for the simplicity and great video

[@Justeen15]

Thank you! There are more videos in the channel to check out! :)

[@kameronkelly7007]

Thank you for helping this make sense 😂 I really appreciate it!

[@Justeen15]

That’s great to hear. Glad to help!

[@patrickemile5443]

Great video 🙏🏾🙏🏾 Makes it very easy to understand

[@Justeen15]

Thanks Patrick! Glad that helps! Any topics you want to see in future videos?

[@jadeb6629]

Great video man!

[@Justeen15]

Thank you! Hope that makes buying puts easy to understand!

[@grandacres427]

GOOD Job - two years later!!! ty

[@Justeen15]

Thank you! What's two years later tho haha?

[@deekaye6666]

Best vid! I like option #2!

[@Justeen15]

Thanks Dee! Let me know if you have any questions I can help clarify :)

[@jaybinks871]

Thanks for the video, my dude.

[@Justeen15]

Thank you! Let me know if you have any questions!

[@jamestakashiro5660]

Hello, thank you for making your video clear on that sewing technique😊

[@Justeen15]

Thanks James! Let me know if you have any questions on put options! :)

[@test7495]

You are the best Bro .. Thanks for the clear explanation .. 👍🏻..

[@Justeen15]

Thank you! Is there anything else you want me to clarify?

[@udaypatil1135]

Awesome teaching mate

[@Justeen15]

Thanks Uday! Let me know if you have any questions!

[@johncastaneda7552]

Please make more videos -- great video just making sense to me -- I begun option trades just weeks ago lol .. no winners yet Robinhood so this video makes sense on put option buys . 😎🙏✌️

[@Justeen15]

Thank you John! Any particular videos/topics you want to see in future videos? Or any other questions I can help answer with? 🤓

[@Justeen15]

Buying put options is not so complicated, isn't? Let me know what you think!

[@mikekhourey521]

That was awesome! Subbed

[@Justeen15]

Thanks for the sub! Let me know if you have any questions on buying puts!

[@thevoyagerguide7183]

Excellent!

[@Justeen15]

thank you!

[@jaybhatt6775]

god level teaching skills

[@Justeen15]

Thank you so much! It means a lot to me :) Let me know if you have other topics you want to see in future videos!

[@KaspaChris]

Thank you 🙏🏻

[@Justeen15]

You are welcome!

[@energygod1]

Just started doing this and you have made it so simple thank you!!! I am subscribed

[@Justeen15]

Thank you! Have fun! Let me know if you have more questions!

[@energygod1]

@@Justeen15 I definitely hope you can make a video of Time frames of when you should get in and out of options especially put options! Lol

[@Justeen15]

Ah yea some other audience members have asked a similar thing: to do a live simulation on buying and selling a put so you can see how the numbers play out. I have that in the back log for future release. Is that similar to what you are asking?

[@mikef767]

Thanks, you are correct that nobody ever explains how to sell the put contract and make money early to exit, nice job!

[@Justeen15]

Thank you Mike! Let me know if you have other questions!

[@mikef767]

@@Justeen15 that's for responding. One last question. If my expiration day is, say Friday the 30th, do I have that entire day to still sell the contract? Not to exercise the option, but sell my buy option?

[@Justeen15]

@@mikef767 Yes you have until market close on your expiration date, so 1pm PST/4pm EST of your Friday 30th example, to sell the option contract you have. But be aware of some holidays and other scenario that the market will close earlier than 1pm PST/4pm EST.

[@anthonydanieltv104]

Bro thank you 🔥

[@Justeen15]

Thank you! Let me know if you have more questions!

[@AmanSingh-xi4lm]

Thanks dude your video made the best sense for closing out a contract

[@Justeen15]

Thank you Aman! Do you have any other topics you want to see in future videos?

[@sharonmanning6474]

Very well explained

[@Justeen15]

Thank you Sharon! Hope the video is helpful!

[@ricorc]

Thanks so much man! I’m about to graduate high school and am thinking of using stocks as a way to make income

[@Justeen15]

Thank you Rico! Congrats on graduation! Passive dividend income is actually a cool. I recently made a video about it if you want to check it out kzbin.info/www/bejne/jV7LgGeJgJidhZY

[@sdnavyblue72]

Dude, thanks so much! Brilliant me ole son!!!

[@Justeen15]

Np! Thanks for the support, Patrick!

[@josezerpa7815]

Thank you!

[@Justeen15]

Thank you Jose! Let me know if I can help answer more option questions! :)

[@josezerpa7815]

@Justeen15 yes, Actually. I wrote a question on the other video comments section. Check it out! Thanks bro

[@Justeen15]

@@josezerpa7815 Great! I responded it. See if that's what you are looking for.

[@honeymaidgrahamcrackers4643]

This video was awesome, far and away the most explanatory and simplest learning method to trading options. One question, for buying puts, the worst case I lose my initial investment, but selling puts I can lose, hypothetically, an infinite amount correct?

[@Justeen15]

Thanks for the kind words :) For selling puts, there is still a max loss. Assume you sell at 600 put on TSLA, by selling it you gain $5k premium at the beginning and set $60k aside as collateral. Bad scenario: if TSLA drops to $590, and you get exercised on, now you have 100 shares of TSLA ($60k collateral was used to buy 100 shares) and the $5k. If TSLA goes bankrupt and drops to $0, your all 100 shares becomes worthless, meaning your $60k collateral from selling that put is worthless. You lose $60k. However, you gained $5k earlier, so your net loss is $55k. There is still a cap to it with selling cash secured puts. I actually made a video on selling put, feel free to check it out: kzbin.info/www/bejne/d2jLc2mHmrSeqaM

[@larrytroyan4229]

nice work, my only request would be to actually show you buying and selling and exercising so we could see it first hand.

[@Justeen15]

Hi Larry! Great point! I realized that and I made a new video to answer that exact question: kzbin.info/www/bejne/npSug6GjbqmaiK8

[@Justeen15]

You should be able to find other live demo videos the option trading playlist too: kzbin.info/aero/PLNgWNg4wjoKvlPiYwJTVnRlyLUTHkWLgU

[@Longrange1116]

i ddont see the options button....do i have to be a gold member? do i need a certain amount of money in my account?

[@Justeen15]

If you are referring to Robinhood (or all other platforms too actually), there can be a few reasons: - you are not approved to option trading yet (you need to apply it under your setting to enable option trading capabilities I remember) - the stock is very newly listed so the option chain is not available yet - this stock just does not have options to be traded Does that help?

[@swethareddi711]

This video was helpful. Can you demonstrate how to sell the call using Robinhood? You showed us how to place a call but having a demonstration on how to sell a call can also be helpful. Thank You!

[@Justeen15]

Hii I already made a video about selling calls! You can find it in my channel :)

[@CantTreadOnMe]

Yeah ive just been trying so hard to understand this and was so close to buying my first put but I just am confused so I stopped myself. I think this is out of my league for now. I hope it clicks for me at some point cuz I really find it interesting. Oh wait I think I get it once you talked about the 2nd option where tou dont buy shares and exercise option and letting a loss expire worthless instead of taking bigger losses. Im still a little confused but you definitely helped me get closer to understanding so thank you for that. Great video

[@Justeen15]

Hi Kewl! Glad to hear from you! - Great that you didn't end up buying the put. Only buy what you understand. You are very disciplined, which is a great quality for investing :) - I'm not entire sure what you mean by "the 2nd option". Yet the baseline is the same, I would try my best to manage losses by understanding the choices I have, and of course, pick the one that makes me lose less if I cannot avoid losses. Maybe try paper trading on TD Ameritrade and buy a put with fake money to see what happens. That might help connect the dots. Good luck!

[@CantTreadOnMe]

@@Justeen15 oh im sorry I meant not actually buying share and just selling the options instead of trying to own the shares etc. Basically what you spoke of at 7:50. Thank you for your help and encouragement. I like your channel alot and will be watching to learn more. Oh and thank you for the paper trading suggestion on td cuz I didnt even know I could do that. That is gonna be a great visual learning experience to watch it play out without real money. I have a td Ameritrade acct too so thats perfect. Thank you so much

[@Justeen15]

@@CantTreadOnMe Oh yes yes, I have never exercised a put I think. I prefer simpler approach. Yea paper trading or there is a on-demand feature in think-or-swim. Both would work! :)

[@CantTreadOnMe]

@@Justeen15 Thank you, you are great!

[@robertleparulo672]

Great videos explaining this. I am also wondering how to choose the strike price when buying puts?

[@Justeen15]

Hi Robert! Thanks for the comment! I do plan to make a video on strike prices. Stay tuned! But speaking of which, how do you currently decide what strike price to go with?

[@robertleparulo672]

@@Justeen15 I Now only sell options. I have never bought options before. I tend to go with a low delta so I have a better chance if not getting assigned.

[@Justeen15]

@@robertleparulo672 nice! that's the theta gang way haha.

[@Justeen15]

@@robertleparulo672 Hey Robert! I made it! Here is the strike price picking video when buying puts kzbin.info/www/bejne/nWKmco2Fm7SKj7M

[@insertcolorfulmetaphor8520]

Real lesson here, hedge your options by becoming an entertaining teacher on KZbin... I cant be the only one to have seen this... Looking through other comments, after I'm done making my comment, to quantify and measure the cringe factor on this comment... Will it go up or down. I'm selling Puts. 😬🙂🤣

[@Justeen15]

I like selling puts 😬🙂🤣

[@LifeHacksProducts]

Hi Justeen, you can sell a put to close the buy put contract. But what happens if there is no one on the other side buying your sell put?

[@Justeen15]

Hi Spawnie, thanks for the question. That is for sure a possibility. If that happens, you will own the put until it expires. There are many ways for preventing this happen tho: 1. Trade options only with high volume stocks. It’s unlikely that no one will buy the put you have if your underlying stock is Apple Google Netflix etc 2. You can try to close your put earlier than expiration date. E.g. if your put expires on 1/7, you can close it early on 1/5 or 1/4. 3. You can check open interest and volume of the option contract. Open interest of 2 means there are 2 people holding this contract. Volume means how many transaction has happened to this option at this strike price. Different strike price option contract will have a different open interest and volume. Those are something I found helpful in my option. Hope those help! Feel free to ask more questions :)

[@LifeHacksProducts]

@@Justeen15 Thank you very much for the reply!

[@Justeen15]

Glad to help!

[@kalenburns4190]

some strikes appear to be more than the stock price on a put that is bought. this confuses me. so if stock A is at 5.75 on october 1st with october 15th expiration. with a 7.5 strike price does it just have to stay below 7.5 to make a profit? so on the day of expiration the stock is at 6.50 do you get the return? thank you.

[@Justeen15]

When u buy a put, you always want your put to be in the money at expiration date, otherwise it will be worthless, meaning the stock price should be lower than the put strike price. In ur example, at expiration date 10/15, for your put to have non zero value, its strike has to be above the stock price. Since you have a 7.5 strike, then the stock price should be below 7.5, so if the stock is at 6.5, you may have a profit. Does this make sense? Here is the interesting thing about option: even if you buy a 7.5 put, and at expiration the stock is 6.5, it doesn’t guarantee u profit. It just guarantees your 7.5 put has value. Whether you will profit has something to do with those Greek values and extrinsic values, would you like a video on that to further explain this? I find it to be important to understand because there is some traps in that.

[@kalenburns4190]

@@Justeen15 great explanation. I like your use of the word trap. Thank you. Your video makes the most sense out of most I have seen so far.

[@Justeen15]

Thank you! I will make more finance videos soon. Stay tuned :)

[@kjkgood]

do you simply exercise the PUT via the contract operationally on the site you bought it on

[@Justeen15]

Hii! What do you mean by that exactly? There are 2 ways to exercise a put: - you click the "exercise button" in the trading software, - you leave it in your account and if the PUT is in the money after market close on expiration date, your brokerage firm will exercise it for you. You don't need to do anything there. Does that help? Or you are looking for something else?

[@kjkgood]

@@Justeen15 yes thanks very much

[@Justeen15]

@@kjkgood absolutely

[@franksu5760]

Hi Justeen 15, I watched this viedo which really help me to understand options. I am new to options, for call or put options , it will start from buying call or put (at least 1 contract) then sell it at time or waiting for expired day. is it that way ？ or it can start from selling 1 call or put contract , then buy it timely or waiting for expired day. thank you very much for your kind reply.

[@Justeen15]

Thank you! Any of these would come in pair: - If you buy it first (open position), then to close this, you will either sell it or exercise it later. - If you sell it first, then you will either buy it back, or exercise it later Typically, it's more common to NOT exercise, but close the position (sell it back if you bought, or buy it back if you sold) some time before expiration, depending on how you feel about the profit/loss you have. Did I answer your question? Or I understood your question wrong?

[@franksu5760]

@@Justeen15 , in your video, if buy put @appl, $120, actual Appl stock price go down to $110 at expired day , If I do nothing ( not sell the contract) , what will happen. I do not have money to buy $110X100. I mean actual case. what is final result ？ any risk for doing nothing ？ thank you very much. I want to start a real try to put options .

[@franksu5760]

@@Justeen15 , yes , I got it . it is easy to understand from buy a CALL or buy a PUT. if starting from selling Call or selling PUT , it is difficult to understand them. Anyway, thank you very much

[@Justeen15]

Yea start from selling could be a bit confusing. But think about this, if you want to buy a call, that means someone else out there is selling it to you. Then if you start from selling a call, you will just be THAT someone :)

[@Justeen15]

If your option is in the money at expiration, and you choose to do nothing about it: a few scenarios here: 1. If you have enough money to exercise it, the broker will auto exercise for you 2. If you have enough money to exercise it, you can call your broker NOT to exercise it within a a few hours after market closes depending on which broker you have 3. If you don’t have enough money to exercise, some brokers will automatically close your position (sell if for u if you bought it, and vice versa) a few hours before expiration on Friday. 4. If you don’t have enough money and your broker doesn’t auto close it for u, you will incur “freeriding violation” and your account could be restricted

[@boersteproductions]

How do you just sell the contract?

[@Justeen15]

TLDR you need collaterals to sell the contract. The video you watched was focusing on "buy the contract", if you want to get a better idea of selling puts, I also made 2 videos on those: 1. kzbin.info/www/bejne/d2jLc2mHmrSeqaM 2. kzbin.info/www/bejne/iWe8e42HlKpol8U Let me know if those 2 videos help!

[@shirleysworld]

how do you know if to buy at the top of the share price or the bottom of the share price

[@Justeen15]

Hi! What are trying to ask? Would you mind elaborating a little more? :)

[@shirleysworld]

@@Justeen15 there are strike prices above the share price and strike prices below the share price. I think called in the money and out the money. How do I know weather to pick which after I buy the put

[@Justeen15]

@@shirleysworld Ah I see your question now. Yes, there are ITM and OTM option contracts you can buy and that's where things get more advanced (congrats getting there!). Let me try to simplify that: If you buy a put because you bet the underlying stock will go down, and if the stock actually goes down, you will make money no matter if you buy an ITM put or OTM put. Here are where they can be different: 1. You may make more money with an ITM put, but you have to pay more to buy that ITM put in the first place (e.g. you made $500 from ITM put vs $300 from OTM put) 2. The return of investment may be higher for OTM put because you pay less money to buy that OTM put in the first place (e.g. you made 20% return from OTM put vs 15% from ITM put) 3. ITM put may have less risk because if the underlying stock goes up or stays flat, your ITM put loses value more slowly than an OTM put, which was because ITM options preserve their value better (e.g. in case of going south, your ITM put may lose 20% of its value vs an OTM put may lose 30%). This has something to do with the "greeks" in option trading. Just google "option greek letters meaning" and you will find some more info. I have plans to make more videos on that but not any time soon. Do those make sense?

[@shirleysworld]

@@Justeen15 thank you I understand a bit better more, not completely. I will continue to research & watch till I fully know what I'm doing. I,m slow & in know hurry to lose why money. Keep sharing greatly appreciated

[@Justeen15]

Excellent. Take your time to learn what you need to know. There are always opportunities in the market :)

[@debmozumder]

thank you for this video.. this is what i was missing from all other stupid youtubers.

[@Justeen15]

HAHAHA thank you Deb!

[@mr6foot3]

What can you educate me on regarding exercising and staying in a option until the contract expires? Should you even stay in a play until the contract expires? Subscribed, and Thanks!

[@Justeen15]

Hey! It's totally up to your strategy, but the general rule of thumb is of course, which choice can give you profit. Assume your paid for $x to buy an AAPL put option with a 120 strike price: 1. If when the option expires, AAPl is 119, so you can exercise it and make a (120-119)x100 = $100. But the net profit is $100 - $x (how much you paid for the put). If the net is >$0, then you make a profit from exercise when it expires. If the net is

[@mr6foot3]

@@Justeen15 I did one the other day, and it expired today. I thought I read if you allow the option to expire then it's deemed worthless. I wanna become familiar so I can make money when the market is bear-ish as well. The knowledge you gave is and will be used. It's still a little confusing with strike prices. I bought a put thinking the stock would go down. It did just that, the contract expired but I lost $10....???

[@Justeen15]

@@mr6foot3 Yeah, if you let it expire and do nothing, it will just disappear. Expiration date =.the last day you can do something with this option. If you don't do anything with it (sell or exercise), it will just disappear. If you have a 120 strike AAPL put option, and on Friday, APPL is 119. Since 119 is below 120, your put option contract is still worth something, but you have to either exercise it or sell it. Because if you don't, again, in the following Monday, this put option will be gone and what you paid for will just be gone too.

[@Justeen15]

@@mr6foot3 I made a strike price picking related video, see if that helps kzbin.info/www/bejne/nWKmco2Fm7SKj7M A few things I noticed and learned along the way: - stay in the play until the contract expires might not always be to your advantage because of theta decay. If I see gains I am happy with, I will just close out the put before it expires. The put can has less value if I hold it until the end. - I typically just sell the same put back to close the position instead of exercising my put. It's faster and easier. - If I buy a put and plan to hold until the end, then I would need to monitor where the stock price is at compared to the strike price of my put. If the strike price expires lower than the stock price, then my put will expire worthless and I lost everything I paid for the put. That's why picking a good strike price is quite important.

[@Hollywood24297]

I buy the put like you say then I need to buy the shares at that price but how do I do that?

[@Justeen15]

Hi! Can you tell me more about what you mean by "I need to buy the shares at that price"?

[@Hollywood24297]

@@Justeen15 like so I buy 100 shares of the stock. Then I sell a put option if I think the market will go down correct?

[@Hollywood24297]

Because when I try it. Then it tells me I don't have enough of the stock to cover the put option. I'm just not sure what I'm missing. Probably dumb to ask sorry to bother you

[@Justeen15]

@@Hollywood24297 Ah I see the confusion here. Short answer: 1. You can only sell the put option contract back to the market 2. Or you exercise the put option contract you have in order to sell 100 shares. Long answer: Assume you buy a TSLA put cuz you think TSLA is going down, and days later it does go down: 1. You sell that TSLA put for a profit (No stocks involved, just buy a put and then sell that put) 2. You buy 100 shares of TSLA from the market, and then exercise that TSLA put, which allows you sell those 100 shares at a higher price. From that you make a profit from selling shares. The distinction here is, once you exercise the put, it disappears. You cannot sell and put and exercise the put at the same time. You pick one or the other. Does that help?

[@Hollywood24297]

@@Justeen15 that helps alot more thank you so much! Now I understand better 😌

[@nodustflyzone]

Does the buyer, who is buying the put option contract, have to have actual collateral cash or $12,000 in order to buy the put option contract? ❤

[@Justeen15]

Hi there! What do you mean by the actual collateral cash? If I want to buy a put option contract, all I need is to have enough money to pay for the price of that contract. If I bought the put contract and later I want to "exercise" my put contract but I don't have 100 shares of the underlying stock, then I would need to find extra money to buy 100 shares and then exercise it. Is that what you are asking?

[@nodustflyzone]

@@Justeen15 Thank you for your reply Sir. Yes, but specifically I mean do we have to the full cost of the 100 shares in our account (either via cash or margin) before we buy a put contract IF we only want sell the contract and not exercise the 100 shares when it expires so that we can scalp it and get out like on a low $500 account.

[@Justeen15]

@nodustflyzone thanks for clarifying! Yeah short answer: you can have a small account just buying and selling option contract to profit without needing ever touch 100 shares Does that answer your question?

[@nodustflyzone]

@@Justeen15do they require you to have the amount of the 100 shares (covering it) in your account if a cash account or in your margin IF a margin account?

[@Justeen15]

@@nodustflyzone As far as I know, no you don't need the amount to cover it, especially if you plan to sell that put contract back in the end. You have to have the money to "exercise" your put contract, if you don't exercise it (just sell it) then you don't need to have the money. The nuance here is if your put contract is in the money, you leave your put contract in your account, and not do anything with it when market closes on expiration date, Robinhood will try to exercise it for you. If you don't have enough money for the 100 shares at the point, you might run in some issue (freeride violation)

[@truthwb]

how to sell this contract back to market?

[@Justeen15]

You can select this contact and click sell. Just like how you sell a stock. You buy the stock first, and then you sell it. Instead of a stock, it’s a contract here. Does that make sense?

[@truthwb]

@@Justeen15 Thanks🙏, I see it now. another question, in Robinhood app, the buying put contract expiration date is not yet there, how is there " Today's return" and "Total return" increase and "current price" 60¢ more than the avg cost?

[@Justeen15]

@@truthwb what do you mean by "the buying put contract expiration date is not yet there"? Today's return is just comparing yesterday's contract closing price to today's price Total return is comparing the price when you opened the position to today's price. Average cost is how much you spent on the position. E.g., if you buy a put contract for $1 last week (your avg cost), and today it's $1.6, which is the current price. That means you can make a 1.6-1=0.6 profit by selling that contract back to the market. Does that make sense?

[@juancarloshill1512]

For my understanding, 1 contract = 1 option= 100 share That is right?

[@Justeen15]

There seem to be different understandings depending who you talk to: 1 contract -> 1 option, which controls 100 shares is apparently a way to look at it, as people use "option contract" and "option" interchangeably. The way I see it (from what I have read), what makes sense to me, and what's in the video is that: 1 contract -> 100 options, which controls 100 shares. I made a clear distinction that "contracts" and"options" are 2 different things At the end of the day, you can use whatever definition that helps you understand the concept the best :)

[@safetyrealm4427]

Yes!! This is true. They only explain one of buying and not selling. Idk why that is?!? Smh

[@Justeen15]

Haha I know right!? I think it's actually easier to understand it all if you can see both side clearly.

[@safetyrealm4427]

@@Justeen15 I agree 100% 💪🏾

[@Justeen15]

@@safetyrealm4427 :) Anything else I can help clarify or any topics you want to see in future videos?

[@safetyrealm4427]

@@Justeen15 Yes. If you could explain the difference between being a Day Trader and Long-term investing.

[@Justeen15]

@@safetyrealm4427 Oh yeah, absolutely. I in fact have already have this topic in my schedule. I will move it ahead more so you can see it sooner. Cheers!

[@venkatmani5675]

Hiii i have a doubt i buyed a buy put contract for 44$ to 29$ and what if i want to sell 32 or 34 is it a profit or loss pls

[@Justeen15]

Would you mind elaborating it more? I want to make sure I understand your question correctly.

[@venkatmani5675]

Hiii sir

[@venkatmani5675]

Hii buyed a stock for buy put option at breakeven of 29.5 and now its almost 30 and when i buyed it was avg of 5.5 and now avg cost is 7.85 and expire date is on 5/21 so how can i calculate my profit and when would be best time to sell pls help me with it

[@Justeen15]

The simplest way to profit for buying puts is to sell the put when its price goes up. So you spent 5.5 buying the put in the beginning? And the price of the same put is now 7.85? If so and if you sell the put now, you profit will be 7.85-5.5=2.35

[@venkatmani5675]

And what about my premium money will it come with thw profit on my acc

[@doinitlive3015]

How did you get $1355 when you were explaining put options? Thanks

[@Justeen15]

Hey! The $1355 is a future estimate price for that put option contract (I don’t have the real number cuz I cannot predict the future), as the underlying stock price drops. The point is if the stock price drops, the put option contract price goes up (above its original purchase price), so that you can sell the put option contract to profit the difference. Does that make sense?

[@mw879]

I think the return of exercising the put option and selling the put option should be the same amount because if it is not the same, we can do the arbitrage.

[@mw879]

Anyway, your video is great.

[@Justeen15]

I think yes and no, the Greek can affect the return and the day of the week you exercise could change the return. I don’t find it tracking 1 to 1, especially when the delta is not 1.0 :)

[@keonj]

So, I want to put this in my own words that way I feel I truly understand the concept. If I Buy a Put, that means I'm hoping for the strike price to be lower than what I want? For instance, AAPL stock is at 124 and I'm hoping the price would go down. So I buy a call with a strike price of 120 thinking that AAPL would go below 120. AAPL stock goes to 119 and once it does, I sell that Put and make profit correct?

[@Justeen15]

I think you got it? Double check on your comment because I think you meant to say a "put" but you typed a "call"? Tell me try to phrase it in your language: - Buy a put with a strike price of 120, you think/want/hope AAPL will go below 120. Yes. - When APPL stock price goes to 119, you can sell that put and make a profit. Yes. That's the bare bone basics of buying a put.

[@keonj]

@@Justeen15 Yes thanks catching that my mistake! But thank you! I understand a bit more now

[@Justeen15]

@@keonj Excellent :)

[@MT-qq1rq]

Hey Justeen, first off great videos on buy call and put options. To be clear with this example, profit is only realized when selling the put exceeds the premium paid (contract price). We need to know the premium paid before we can safely say this scenario produces a profitable transactions. Do you agree? Also great point on making money on buying and selling option contract. Thanks!

[@Justeen15]

@@MT-qq1rq Thanks Mike! - Oh yes, the profit is only realized then selling the put exceeds the premium paid. That's the definition of profit, right? :) sell put price > buy put price - You will know the premium paid for sure because you are buying the put. That's the price you pay for the put option contract, right? Whatever you pay for it, that's the premium. Do those make sense? Or am I understanding your questions incorrectly?

[@neurosentience5150]

Selling the contract is better and you don’t need to buy the shares.

[@Justeen15]

I totally agree. Why bother with all those hassles!

[@daniellopezk.9659]

Hey I just lost 115k, I think I may have missed something

[@Justeen15]

Sorry to hear that. Was it from buying a put?