Example — Buy To Open Put

Since the market price is higher than your $95 strike price, the option is "out of the money." As expiration approaches, the "time value" of the option decays.

To profit from a downward move without actually shorting the stock (which carries infinite risk). buy to open put example

The contract is now worth $1,500. After subtracting your initial $200 investment, your profit is $1,300 . 2. The Hedge (Stock Stagnates) The stock stays flat at $100 . Since the market price is higher than your