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The objective is to keep the price of the underlying above the highest strike price. Strong declines are never expected. Protective Put It consists of the purchase of a put option on the underlying asset in the portfolio. For investors who want to protect stocks in their portfolio against expected price declines or when there is uncertainty, this protective option offers a way to insure by purchasing the put option for which the option premium needs to be paid. In this case, investors would buy one contract for every shares they own. Naked put They are strategies aimed at buying a stock for a price lower than its current market price.
This strategy can be excellent or pose a risk for the investor. If the ID Number List underlying asset moves contrary to predictions, significant losses can be generated since the writer of the option is obliged to buy the stock at the strike price regardless of the stage of the negotiation. However, if the underlying asset moves in the right direction, the profits will be huge. What is Bullish and Bearish in finance? - bullish bearish x Bearish Strategies We have already told you that the bearish investor is more pessimistic and tends to calculate downward results, so not everything will be as beautiful as the bullish profile describes.
Bearish strategies are employed when the options trader expects the price of the underlying stock to move downward. It is necessary to evaluate to what extent the stock price can decline and the time frame over which the decline occurred to select the optimal trading strategy. Let's look at the different long put is a sale option that is taken as a speculative game when there is a decrease in the price of capital. This option is purchased in the hope that the price of the underlying stock will fall, thereby increasing the value of the stock.
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