Stocks & Commodities V. 33:08 (32–33): Explore Your Options by Tom Gentile
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Explore Your Options by Tom Gentile
PUTTING AN OPTION LESSON TO WORK
Much of what I and the rest of the option community like to trade is alternatives to buying into stock positions. But every once in a while, opportunities come along to take advantage of the downside in a stock or the overall market. The question that I frequently get is, “How do I sell a stock at a higher price and buy it back at a lower price?” This is called shorting a stock, but I believe there is a better way that involves lower cost and risk to the bearish trader. It involves buying a put option.
The case study I will highlight here is the FDX Mar15 180P—which is shorthand for the FedEx March 2015 $180 strike price put option (Figure 1)...
PUTTING AN OPTION LESSON TO WORK
Much of what I and the rest of the option community like to trade is alternatives to buying into stock positions. But every once in a while, opportunities come along to take advantage of the downside in a stock or the overall market. The question that I frequently get is, “How do I sell a stock at a higher price and buy it back at a lower price?” This is called shorting a stock, but I believe there is a better way that involves lower cost and risk to the bearish trader. It involves buying a put option.
The case study I will highlight here is the FDX Mar15 180P—which is shorthand for the FedEx March 2015 $180 strike price put option (Figure 1)...
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