Hi can a kind person out there help me understand a put option xoncept. the idea is if you feel the market is bearish you can buy a put option at the money, out of the money ( for insurance) to protect your stock position. can i instead buy an in the money put option and exercise it before the expiry date for a profit. say a stock is now trading at $98 can i buy a $108 strike price put option and exercise it right away. please help plsss
I don't know if you're a troll or not, but consider the following: say that $108 put costs you $12. You just paid $12 to sell your $98 stock for $108. You're $2 in the hole. Just sell the stock (or keep the put in case the stock dumps and the put value goes up, hedging the downward price pressure on the stock).
Bullish sell a put. Bearish buy a put. Start there. If you want less risk and a slower moving trade you can buy (bearish)and sell (bullish)put SPREADS instead.