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by vitohuang
3045 days ago
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I'm new to options. Looking at the AAPL options on yahoo finance, I can't find any puts that cost $156.41, even those in the money 2020 options. How did you get selling a put cost same as the underlying share price? I thought one of point of options pricing is you don't need to put up the same amount as owing the shares. |
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> How did you get selling a put cost same as the underlying share price?
1. Selling put options means you are PAID the price of the option.
2. You might be forced into buying those shares at that price at any time. Therefore, it would behoove you to have that much money in your account, "just in case". By selling an option, you've implicitly signed your name on a very powerful contract and your brokerage will do everything in its power to meet the terms of the options contract (including selling everything else in your account if necessary).
2.5 A Call option is the same thing, except slightly more dangerous in many cases. You are forced to sell those shares to someone else. So in the case of "selling naked calls", your brokerage will sell everything, then buy the stock (no matter what price that stock is at). Naked calls have infinite risk. In contrast, a naked put has a similar risk to buying 100 shares, so naked-puts are a good entry-point for learning the options market IMO.
3. Various options strategies can negate this possibility, but that's a bit more complicated. These more advanced strategies (ie: bear spreads, bull spreads, iron condors...) are a bit safer to play with, but are highly-levered.
> I thought one of point of options pricing is you don't need to put up the same amount as owing the shares.
That's called "leverage". I mean, play with it if you want, but if you really want excitement, there are lotto tickets and casinos. Casinos are great cause you pretty much get free drinks while you gamble.