Practical use of options.


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Put Practical use of options are derivative instruments that enable its buyer a right but not an obligation to exercise his right to sell a particular security at a pre-specified price popularly known as strike price on the date of the expiry of such a derivative contract. Top 4 Examples of Put Option The following are examples of the put option for your better understanding.

The firm is holding multiple stocks forming part of NASDAQ and is concerned that the index will fall in the next two months owning to dismal corporate earnings, trade warand poor administration and intends to safeguard the portfolio without liquidating the securities.

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At the end of the next month, Nasdaq fall by 10 percent, and the losses in its securities got adjusted with profit input options purchased by it, and Seed was able to navigate its portfolio from losses by hedging the same through the purchase of put options. Put Option Example 2 They can be used under various options strategies along with selling underlying stock futures or by combining it with the call options to generate a good return with limited risk.

He believes that the price of Facebook inc. He intends to make money through this move by taking a hedged risk.

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Put Option Example 3 They are a great derivative instrument to indulge in speculation and make handsome gains when markets crash. He believes that the global economic environment is pessimistic, and the recession in us is not far away and expects the market to fall badly. Details of the same are mentioned below: Current Price:

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