wmitchell said:
AgEE10 said:
KT 90 said:
wmitchell said:
So I have never bought or sold a put.
If I buy $5 Feb19 puts on MBIO - I then have the option to sell them at $5 on that date right? Does it get auto-exercised if below $5? I see the ask a 1.1 right now. What are the pros/cons?
If below $5, you have to buy 100 @5.00.
If you're buying the put you're selling the shares at 5.00 if below 5 at expiration.
Selling the put, you're buying the shares at 5.
Thanks - not sure why puts are so confusing to me but they are!
It doesn't sound like you're ready to trade, which is fine.
I'd recommend paper trading with fake money (several brokers offer this capability) for a while, to get a feel for the rapid movement, decay, bid/ask spreads, and thinly traded nature of options vs. stock. Test your trading tools, such as limits and stops to get a feel for price behavior. It's riskier, and can be a whole different ballgame, if you're not prepared.