Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
nufloyd,

You wrote, when you buy a protective put on a stock it gives you the right to sell
that stock at the strike price you buy. if you decide to keep the stock do you just sell to close, and do you receive the premium of the bid price?


Yes.

In addition, it's not really necessary for you to exercise the put. You might prefer to sell the contract instead. If the stock price plummeted, the put's intrinsic value should have gone up a corresponding amount. In fact, if the stock just plummeted, the implied volatility will likely have gone up as well...

- Joel
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement