How to make a profit on a put option.
In options trading, put options are a way to earn income. A put option refers to the right of the holder to sell the underlying asset at a specific time in the future. So, how do you make a profit with a put option?The following will be analyzed in detail from the two aspects of **put option and selling put option.
1. Put options.
1.Earn premiums.
When an investor puts an option, he or she will be given the opportunity to earn a premium. The premium is the trading of the option, which is related to factors such as the underlying asset**, exercise**, expiration time, and volatility. Before the expiration date, when the underlying asset is ***, the value of the put option will rise accordingly, and the holder can choose to sell the option and receive the proceeds of earning the premium.
2.Earn exercise proceeds.
When the market appears, the holder can exercise the option and get the opportunity to earn the exercise income. Exercise proceeds are the difference between the exercise of an option** and the underlying asset market**. Before the expiration date, when the underlying asset *** reaches below the exercise**, the holder can buy the underlying asset according to the exercise**, and then use it in the market ** to make a profit.
2. Sell a put option.
1.Get the opportunity to earn royalties.
When an investor sells a put option, he or she will be given the opportunity to earn a premium. Unlike a put option, the premium income from selling a put option becomes the seller's income. Before the expiration date, when the underlying asset is ***, the value of the put option decreases accordingly, at which point the seller can earn the premium.
2.Get the opportunity to earn exercise proceeds.
When the market appears, the buyer will choose to exercise, and the seller will have the opportunity to earn the exercise proceeds. Exercise proceeds are the difference between the exercise of an option** and the underlying asset market**. Before the expiration date, when the underlying asset *** reaches above the exercise**, the buyer can buy the underlying asset according to the exercise**, and then use it in the market ** to make a profit. In this case, the seller is required to deliver the underlying asset or pay the corresponding cash to the buyer in accordance with the exercise**.
It should be noted that the use of put options to make profits requires judgment and operation according to the market**. When choosing** or selling a put option, you need to consider factors such as the underlying asset**, exercise**, expiration time, and volatility. At the same time, it is also necessary to understand the knowledge of trading rules and risk control, so as to better grasp investment opportunities and avoid risks.