This week's question:
DATE: January 16, 2015
Can you explain the potential opportunities and risks associated with selling put options?
Selling a put option 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. This strategy may also allow you the opportunity to purchase a stock for less than its current price. If you are interested in investing in a stock, you might want to consider selling a put as a means of buying that stock. To learn more about selling put options, view this segment of "Ask the Institute."