Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0
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.
Print the post  


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.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.