Introduction to Options -- Part Two (Puts)

[@kevinbracker]

Thanks. Glad you are finding the videos helpful.

[@kehindesegun4674]

Great videos, clearly explained.

[@lujain227]

finally i understood this chapter..thank u soooooo much

[@houdapurple]

you are making a genius out of me one video at a time LOL thank you

[@artind3228]

Can you exercise the option whenever you want during the expiration date or it has to be exactly on that date?

[@kevinbracker]

The answer is "it depends". Technically, options can be set up as "European" or "American". European options can only be exercised at expiration. American can be exercised anytime prior to expiration. Most of the time, the distinction is irrelevant as it is rare that you would want to exercise early. This is because exercising early essentially throws away the speculative premium (better to sell your option than exercise early). However, there may be some cases (primarily with dividends paid right before expiration) where exercising early can be to your advantage.

[@dpenhadavid]

Gud stuff nd thank u.

[@beesnumber1]

Do you have to own the stock to buy the put option?

[@kevinbracker]

No -- you can buy (or write) put options without owning the stock. When you buy a put option you are typically making a bet that the stock price is going to drop and are trying to profit from that drop. For example, if the stock is worth $68 and I have a put with a strike of $70, the intrinsic value is $2. However, if the stock falls to $50, my intrinsic value grows to $20. There are other strategies that involve buying puts (hedges, bets on volatility, etc.) as well, but the "betting on a stock price decline" is the most straight-forward.

[@beesnumber1]

Thank you for such a great explanation.

[@brithopper]

Can I sell the put before expiration .. and collect the profit ?? ( if i think the market is turning bullish)

[@brithopper]

Got the answer from a post below ... thanks