How does a put option work?

Answers:0   |   LastUpdateAt:2012-10-16 05:27:05  

Asked at
I know a little about the options. I know that a put option is an agreement between two parties where one party sells the other option or the right to sell an underlying asset such as a stock, commodity etc. at a specified price and specified and within a framework of specific time . My question is what determines the price that a party after the exercise of the option can sell the title ? I also wonder what would happen if the buyer were to purchase only the option but does not actually own any shares of the actions that the option will be secure ? Also, how would the pure selling options only work ? If both parties say only handled the transfer of the option , but do not incorporate any asset trade ? Also, how are the benefits calculated for the party who buys the option ? Also another question I have is can the exercise price of the option to be equal to the market value of the assets at the time that the terms of the option being negotiated and consummated the subsequent sale of the option ? Also what determines the price of the option , I know the value of options decrease as the stock price increases , because then the option becomes worthless and conversely, decreases the value of the options as increases the price of the good, but what drives the price of the option , what other factors influence its price beyond the market value of the asset underlying the option ? It would also be a buyer to acquire greater benefits if you just buy and sell only the option or sell the shares of the actions outlined in the contract of sale options and what the relative risks for both scenarios ?

This Question:"How does a put option work?" No answers yet. Be the first!
Related Questions
  • Answer This Question:How does a put option work?