I know you guys aren’t financial advisors, but the husband is doing something I don’t understand. He’s planning on buying Disney stock so that when it tanks he’ll profit. The rest of our money is in DWAC, 1000 shares. Is what he doing safe?
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Put options
Put options give you the right to "sell" a stock at a specified price. When you are buying Put options, you are expecting, or want, the price of the stock to decline.
For instance, if you bought an IBM December 130 "Put option", the option (contract) gives you the right to "sell" IBM stock for a price of $130 on or before the third Friday of December.
If IBM falls below $130 before the 3rd Friday in December you have the right to sell the stock for more than its market value.
So let's say that IBM falls in price to $76. Everyone else who owns the stock has to sell it for $76, but you own a contract that says you can sell it for $130!