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| PDF Title : | Option Trading Tactics : Course Book |
|---|---|
| Total Page : | 155 Pages |
| Author: | Oliver L. Velez |
| PDF Size : | 1.1 MB |
| Language : | English |
| Rights : | wiley.com |
| PDF Link : | Available |
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Option Trading Tactics : Course Book – Book
Everyone in this room deals with puts every single year whether you know it or not. Puts are the same as buying an insurance policy. The paid guarantees that if your car is stolen or wrecked beyond repair, you will get the full value that’s in the contract, the agreed-upon value.
So you pay an insurance company a certain amount of money for a contract that says that if something happens to this car, you’re going to give me this price for it. The insurance companies are like option sellers.
They receive a for assuming the risk of the obligation to make good. They’re willing to bet that you will not get into an accident. You’re saying, you know what, just in case I do, I want you to be responsible, and I’ll pay you for being responsible. So you buy the contract.
You give the company a , and in exchange for the , you have the right to transfer all the risk to the insurance company Now the insurance company has the risk. Your risk is just the you pay. We use puts in everyday life.