Put options grant the holder or buyer of the put stock options the right to sell the underlying security at the strike price until the expiry date. In turn, the seller or writer of the put has the obligation to buy or take delivery of the underlying security until expiration.
Suppose you hold a high-quality stock in your portfolio that you believe will rise in price over the long term. But you’re concerned about a possible downturn in the market in the short term. You can buy a put option for the stock. This will give you the right to sell your stock at a set price (the strike price) within a certain time frame (before the expiry date).
If the stock price stays above the strike price, you would let the option expire unexercised—you only lose the cost of the put. But if the market declined drastically, you could exercise your option and sell your shares to the writer of the put at the strike price. You could then, if you wanted to, buy the shares back again at the lower market price.
Note, though, that buying put options for insurance is like betting against yourself. You’re better off just selling the stock if you think it’s going to drop in price. Furthermore, you may be right about a market decline, but you have to hope it happens before your put expires. If the decline takes a while to occur, you could continue to buy puts for a considerable period of time. That would eat steadily into your eventual profits.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Invest mainly in well-established companies;
Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
Downplay or avoid stocks in the broker/media limelight.
This month we look at two new ETFs launched by U.S. providers. The first promises to provide some protection when markets decline, and the second invests in companies that will benefit from the work-from-home trend.
NATIONWIDE RISK-MANAGED INCOME EQUITY ETF $27.45 (New York symbol NUSI) seeks to provide regular… Read More
Early in my investment career, before I had much money of my own to invest, I took a strong interest in market indicators (also known as investor rules of thumb, investor guidelines, market lore and so on). Who could resist? Market indicators seemed to provide… Read More
BMO US PUT WRITE ETF $16.99 (Toronto symbol ZPW) sells put options on a range of U.S. large-cap stocks to generate income for the ETF. These options give the put buyers the right to sell specific stocks to the ETF at a pre-determined price. Buyers profit when a stock’s… Read More
If you’re going to engage in stock market speculation, you should stay out of stock options and warrants. Here’s why:
Stock market speculation and why doing it through stock options will most likely lead to losses
An option is a contract between a buyer and a seller,… Read More
Here we take a closer look at two relatively new North American ETFs. This month’s selections include a quantitative, low-volatility Canadian equity ETF and a global pet-products ETF.
FRANKLIN LIBERTY RISK MANAGED CANADIAN EQUITY ETF $21.04 (Toronto symbol FLRM; Market cap: $12.7 million) aims to invest in Canadian equities… Read More
If you want to get better value investing returns, it’s important to focus on stocks that are cheap in relation to earnings, and consider a variety of other investment qualities like years of profit, years of paying dividends, and manageable debt
If you invest in good… Read More
Many aggressive investors find the lure of stock options hard to resist. However, despite that appeal, the vast majority of investors lose money with options.
Call options give the holder, or buyer, the right to purchase the underlying security at a specified “strike” price up until… Read More
Your investing plan can change as often as you need it to, but should zero in on high-quality stocks and diversification
One of the most common investment platitudes you’ll ever hear is that investors should, “have a plan (or system) and stick to it.” This is… Read More
Here are three new ETF launches. Each uses “quanitative modelling.” That may make their investment approach sound scientific; however, in our view, it will likely detract from their long-term returns. Many ETFs that use a socalled “black box” to pick stocks find the approach works… Read More
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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Information from Other Sources: For reasons such as improving personalization of our service (for example, providing better product recommendations or special offers that we think will interest you), we might receive information about you from other sources and add it to our account information. We also sometimes receive updated delivery and address information from our shippers or other sources so that we can correct our records and deliver your next purchase or communication more easily.
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Does TSI Network Use the Information It Receives?
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How do we protect your personal information?
TSI Network does everything possible to prevent unauthorized intrusion to its websites and the alteration, acquisition or misuse of personal information by unauthorized persons. Notably passwords submitted by users of our websites are encrypted using encryption mechanisms. However, TSI Network cautions visitors to its websites that no network, including the Internet, is entirely secure. Accordingly, we cannot be responsible for loss, corruption or unauthorized acquisition of personal information provided to our websites, or for any damages resulting from such loss, corruption or unauthorized acquisition.
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TSI Network has procedures in place to keep your personal information accurate, complete and current for the purposes for which it is collected and used. You may review the information that you have provided to us and where appropriate you may request that it be corrected. If you wish to review your personal information please send a request to: firstname.lastname@example.org.
How do I withdraw my consent to use Personal Information? Access, Correction, Inquiries and Complaints
If you wish to request access to, or correction of, your personal information in our custody or control, or find out how we've used or disclosed that information, please make your request in writing to us. We may need to verify your identity before searching for or providing you with personal information. In some circumstances, we may not be able to provide access to your personal information, for example if it contains the personal information of other persons, if it constitutes confidential commercial information, or if it is protected by solicitor-client privilege. If we deny your request for access to, or refuse a request to correct, your personal information, we will advise you of the reasons for this refusal.
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What Choices Do I Have?
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Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
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