The Motley Fool Discussion Boards

Previous Page

Investing Education / Terms, Definitions, & Jargon


Subject:  Options Date:  3/29/2000  10:41 PM
Author:  Lollyinc Number:  613 of 2244

I was just reading an article in a financial magazine that dicusses the benefits of selling puts.

I understood it to mean that if you sell a put option, the money you get for that sale is yours to keep regardless of the direction the stock heads. You have to buy so many shares of the stock in question at a set price at the buyer's request. Then, the article says that the buyer is hoping the stock will drop before a given date. Why? And why would it say that I (the seller) am hoping for a rise in the price?

I don't have any intention of messing with "puts" and "calls", but I do want to understand how they work. The paragraph above may be full of misunderstandings, so please set me straight if I've blown it. Thanks for your help in clarifying this.
Copyright 1996-2022 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us