Ask the Institute

Ask the Institute Archive

DATE: July 15, 2013

QUESTION:

Can you discuss the potential opportunities and risks of selling put options?

ANSWER:
Selling put options is a strategy that allows you to be paid a premium in return for assuming the obligation to buy a particular stock. The premium received gives you some limited benefit by lowering your break-even. Selling put options may also give you the opportunity to purchase a stock for less than its current price. As an investor, if you are interested in investing in a stock, you may want to consider selling a put as a means of buying that stock. To learn more about selling put options, view this week's segment of "Ask the Institute."

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