POSITIONS FOR $800->$100k

[u/brokenb3ar]

Since yall can’t stop crying about my positions. I’ll post it now here lol.

[u/chili01]

508 is the strike price. He makes money if QQQ goes below 508 before or at 3/7 expiration date.

[u/Nyx87 → u/[deleted]]

You can’t tell when he bought or the stock price at the time of purchase from this pic.

[u/Nyx87 → u/[deleted]]

Puts and shorts are similar in that you are betting the stock goes down. Puts are a contract that you have to sell 100 shares at the strike price by the time it expires or before then.

The cost of the contract varies based on things like time to expire, volatility and closeness to strike price, and you can google option calculators for that.

[u/Nyx87 → u/[deleted]]

For a put, you buy while the stock is high hoping it goes down.the further the stock price goes Duran the more money the contract is worth. Shares never exchange hands unless the option is exercised. Most people sell the contract rather than exercise them because the contract is worth more depending on how much time to expire is left. If you exercise a put you sell 100 shares per contract to the writer at the strike price, making the difference between the current price and the strike price.

[u/Nyx87 → u/[deleted]]

so you’re saying that the person who bought the put contract can himself sell the contract to another (wanting to buy a put) if the gains are better than exercising the option?

Yes, on option charts you can see what is called Open Interest, which is basically how many bids/buyers there are on that option contract.

If so, that’s interesting. Don’t they have to write another contract? Who still owns the stock?

Writing another contract would be pointless over just getting cash for the contract. it's sort of a double negative. Why write another contract with the same value if someone is willing to buy your current one for the same price.

how does that contract get created? Does a person have to have the number of shares to begin with to be able to write a contract and sell it?

Contracts use either your own stocks (for calls unless you're insane) or cash (puts) as collateral when you write them. For puts that are exercised, the contract owner (you supposedly) will buy the shares at market price and then sell them to the writer at the strike price. So if your strike is $100 and the share price is currently $80, you make $20 per share by exercising. in this case a third party owns the shares until you exercise.