PUTS: are the opposite of CALLS. CALLS are right buy a stock at a given price. PUTS are rights to sell a stock at a given price.
An option’s price has a premium, which depends on several factors, some being the duration to expiration, the strike price’s nearness/farness to the current price of the stock, current volatility of the specifc security, etc.
As with an option, you have a choice to buy an option or write an option. If you buy PUTS, you’re betting the stock will decline.
Personally the only thing that I do major with options is write covered calls on stocks that I want to sell at a specific price. Considering that most options expire worthless or with exercise cost that exceeds the fmv of the stock price the day I’m assigned the option, it’s pretty much extra money of securities that I wanted to sell or that ain’t moving. So far for me, 70% of my written options expired worthless, 20 percent are exercised with a total cost that was more than if the people buy the stock themselves, and the remaining 10% are exercised at my lose (stock option stice price + option premium < market price of stock day I was assigned to option.)
I have a much better track record doing this than when I use to buy calls or puts, when I was about 30% right and 70% wrong, and the 30% of the time being right never yielded more than the 70% of the time being wrong.
