@paulceltics a put is the right to sell the underlying at the exercise price. To be "short" is a position. Being short means you are the seller. If you are short a put, you have the obligation to buy the underlying good, if the buyer decides to exercise their option to sell the underlying.
At the end you stated that the Profit/loss diagram starts at $50 and goes down to -$10 but It should say $40 to -$10 as ($50 subtract the $10 cost of put).
Why would the buyer who has the right to buy or not, why woulld he or she buy it from the seller at 50 when in the market it is zero? The seller has an obligation to sell but not right to sell. The right is for the buyer who paid the premium
Investors who speculate that the price of the underlying instrument will not go below the strike price. These investors receive premium from the buyer of the put option.
Whatever i didn't understand in the class the wholenhour i figured it out now. Thanks so much!
Thank you so much for this!
@paulceltics a put is the right to sell the underlying at the exercise price. To be "short" is a position. Being short means you are the seller. If you are short a put, you have the obligation to buy the underlying good, if the buyer decides to exercise their option to sell the underlying.
This helped a bunch! Thanks!
At the end you stated that the Profit/loss diagram starts at $50 and goes down to -$10 but It should say $40 to -$10 as ($50 subtract the $10 cost of put).
you should have different strike and spot prices...
is the payoff y-intercept the strike or spot?
Why would the buyer who has the right to buy or not, why woulld he or she buy it from the seller at 50 when in the market it is zero? The seller has an obligation to sell but not right to sell. The right is for the buyer who paid the premium
What is the different from put and short?
Thanks
If a company goes bankrupt and it's put contract is bought at $0, then how can the firm meet the obligation to buy the contract with no money?
Who is selling the put option for me to buy it?
Investors who speculate that the price of the underlying instrument will not go below the strike price. These investors receive premium from the buyer of the put option.
When the value of the stock is worth nearly zero dollars why would they buy it from me at 50 dollars?
contractual obligation