Make Money With Stocks We Don't Own or Buy Stocks Cheaper with Put Options | Summary and Q&A

TL;DR

Learn how to use put options to potentially profit from a stock's decline or set up to buy it at a lower price.

Key Insights

• 👻 Put options allow investors to profit from a stock's decline, while call options allow them to profit from a stock's rise.
• 🇰🇼 Selling put options can generate income while waiting for a stock to reach a desired buying price.
• ❓ The seller of a put option has the obligation to buy shares at a predetermined price, while the buyer has the option to sell shares at a predetermined price.
• 👨‍🔬 Researching and having confidence in the stock is crucial for the success of this strategy.
• ⌛ This strategy can be repeated multiple times until the desired buying price is reached.
• 😘 The downside of this strategy is the potential obligation to buy shares at a lower price if the stock declines significantly.

Transcript

hi i'm jimmy in this video we're going to look at how we can use put options to either make money with a stock without even owning it or how to set up ourselves to buy a stock at a lower price than the current market price okay so let's jump right in so first we'll start with the basics of what a put option is and how we can make some money with op... Read More

Questions & Answers

Q: What are the two types of options?

There are put options and call options. Put options allow investors to profit from a stock's decline, while call options allow them to profit from a stock's rise.

Q: How does selling a put option work?

When selling a put option, the seller receives a premium and has the obligation to buy shares at a predetermined price if the option is exercised.

Q: What happens if the stock price rises and the put option expires worthless?

In this case, the seller of the put option keeps the premium received at the start of the contract as profit.

Q: Why is it important to research and have confidence in the stock before using this strategy?

Having confidence in the stock ensures that investors are willing to buy the shares at the predetermined price, even if the stock declines further.

Summary & Key Takeaways

• Put options allow investors to make money when the price of a stock falls.

• Selling a put option gives the seller the obligation to buy shares at a predetermined price, while buying a put option gives the buyer the option to sell shares at a predetermined price.

• By selling put options, investors can generate income while waiting for a stock to reach their desired buying price.