WHAT IS A "PUT" (AS IN INVESTING

When a trader or investor gets involved with options, he/she discovers there are two kinds: Calls & Puts.

An option is a contract giving the purchaser the right BUT NOT the obligation to buy 100 shares (a contract) of a specific stock at a specific price on or before a specific date.

I was taught this is how a person interested in buying and selling options should remember them:

Options FOLLOW the price of that particular stock's price. When you pick UP a telephone, you make a Call. In other words you want that stock to go up in price.

When you finish the conversation you put DOWN the telphone. In other words you want that stock to go DOWN in price.

From Stocks, Calls and Puts I heard there are about 21 different strategies or ways in which they can be traded. I know of most of them. I use about 5 of them.

THE BIGGEST problems folks have about trading options is:
understanding the jargon
AND
remembering time can be a HUGE enemy or a GREAT friend!
AND thinking they are getting something "really cheap", when in reality, they could probably be buying something which can only be compared to a lottery ticket.

Here's a very short explanation:
A person looks at an option chain (all the info they need to know about that particular option).
He/She Sees a symbol with a bunch of letters representing that particular option.

ONLY ONE EXAMPLE:
XYZ FF: Means the stock is XYZ for June - which is the 6th month (F is the 6th letter of the alphabet) at a BID of 5.5 and an ASK of 5.8 meaning the cost of one contract is $550 to sell AND a cost of $580 to buy that one contract. I won't get into Open Interest, Volume, Historic Value (HV), Intrinsic Value (IV) or any of "the Greeks".

For the Strike Price of $30. 6 X $5 = $30.
This is for "XYZ June 30 Call."

For Puts: XYZ is still the stock symbol, BUT because there must be a difference between Calls and Puts the second half of the alphabet is used.
The symbol would be XYZ RF (R is the 6th letter from and including M.

When the stock's price rises, the June $30 Call could also rise. AND the June $30 Put could go down.

When the stock's price falls, the June 30 Put could rise AND the June $30 Call could fall.

This is a VERY, VERY, VERY, VERY basic explanation of options and how they work.

Thanks for asking your Q! I enjoyed doing my best to answer it!

VTY,
Ron Berue
Yes, that is my real last name!

Sources: My wonderful family!

My wonderful coaches and mentors!

Two (2) of THE ABSOLUTE BEST, MOST wonderful trading groups in the world, of which I am MOST proud to be a member of.

Trading optionns and stocks over 2 years.

"THE University of Hard Knocks!"

Put Option

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares.

http://www.investopedia.com/terms/p/putoption.asp

The answer is under your caps button.