WHAT ARE PUT OPTIONS?

Put Option is a type of derivative that comes with exclusive set of benefits. Beginners often find Put Options slightly tough to understand. But now you don’t have to worry. Learn the basics of Derivative – Put Options with Angel One. Presenting fun-to-learn 60sec videos by Angel One, to help beginners grasp the basics of equity & share-trading. Put Option is an effective means to minimize risks in a volatile market.

Here’s an easy explanation of how it works.

Transcript :

what are put options meet Ameth Hamid owned some shares of set cop currently priced at rupees 300 he is afraid their prices might fall another investor Reynold thinks zette cop shares are stable and fairly priced so amat and Vinod signed the contract of put option by which amid gains the right to sell and the node becomes obligated to buy the set cop shares in a month’s time at an agreed price of rupees 300 irrespective of the market price to exercise this option Ameth base Vinod a fee or premium of rupees 2 per share if said cop shares form below rupees 300 Ameth can use the put option and sell his shares to Vinod at rupees 300 and limit his losses if the price rises Ameth can sell the shares at the market price and recover the premium he paid for the put option put options are for traders who want to minimize their risk in a volatile market [Music]