January 27, 2010
Day trading online - The "put" is just the opposite.
It permits you to sell 100 shares of a named stock at a stated price (again usually the current actual market price) at any time within 30 days, 60 days, or as long as six months. The price you pay for either "option" will depend on (1) the volatility and activity of the stock in question, (2) the actual length of the contract, and (3) the current price of the stock. Obviously, a stock is likely to vary, or swing, more widely pricewise during six months than during a 30-day period; so the six-month contract will always cost substantially more than a shorter one. Lest you get confused in theory, here are a series of actual "put" and "call" option contracts in familiar stocks, selected at random and available at reputable brokers on January 15, 1960. since they uniformly charged more for the option to buy (the call) than for the option to sell (the put). So much for the technical description.
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