Put options 101

Apr 23, 2020 21 Comments

Just wanted to take a look at how contracts work so I just bought
1 contract UBER $26.0 PUT 5/1
My break even price is 25.57.

So what are my options at this moment?

p.s. I am using robinhood app and i find the ui terrible. #investments #personalfinance

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TOP 21 Comments
  • Niantic
    Yicd09

    Go to company page Niantic

    Yicd09
    Exercising the option isn't the only way to make money on it - you can also sell the option prior to expiration to close your position.
    Apr 23, 2020 0
  • What’s your delta? If you’re scared of losing more, buy UBER shares equal to your negative delta of your put option. For example, if your put is at the money, -50 delta, buy 50 shares to prevent loss.

    If your put is in the money, BUY SHARES NOW!!!!!
    Apr 23, 2020 2
  • OP
    what if before 5/1 the price drops let's say $15 and you want to cash out. Do you sell the contract or is there a way to sell the stocks at the strike price?
    Apr 23, 2020 4
    • A put option is selling shares at the strike price. When your put is in the money, you are short 100 shares at the strike, and the premium reflects intrinsic value (how much money would have made had you just shorted shares instead of buying a put)

      What you do with the contract is up to you
      Apr 23, 2020
    • If you want to exercise early, contact Robinhood. I don’t recommend this if you don’t already own shares of the underlying
      Apr 23, 2020
  • On 5/1 if Uber closes below 26 then you make money by having some one buy each Uber share at 26. If the share price holds above 26 your option is worth 0 on expiry date(5/1). Buying a put is like insuring your portfolio. It will come handy in case of a disaster(when price drops below the option strike price)
    Apr 23, 2020 2
  • Amazon
    Mr.Jupiter

    Go to company page Amazon

    Mr.Jupiter
    Oh you bought a put eh. How down are you? It’ll likely get worse.
    Apr 23, 2020 0