Write a put option
The Bottom Line Selling also called writing a put option allows an investor to potentially own the underlying security at a future date and at a much more favorable price. Key Takeaways Selling also called writing a put option allows an investor to potentially own the underlying security at a future date and at a much more favorable price.
Selling puts generates immediate portfolio income to the seller; puts keep the premium if the sold put is not exercised by the counterparty and it expires out-of-the-money.
Do I Get Charged Interest For Writing Puts?
An investor who sells put options in securities that they want to own anyway will increase their chances of being profitable. Note that the writer of a put option will lose money on the trade if the price of the underlying drops prior to expiration and if the option finished in-the-money.
Call Options vs. Here's a summary breakdown of buying vs. Other benefits of put selling can be exploited once this important pricing rule is satisfied.
Put Selling in Write a put option Let's look at an example of prudent put selling. Suppose that shares in Company A are dazzling investors with increasing profits as a result of a new, revolutionary product. Compare Accounts.