Whether it's **or buying**, many people have encountered such a situation:
You were attracted when the market was rising, and you made some money by buying, but your money was already relatively high, and you were hesitant to continue to chase high, or sell it at a profit.
At this time, the market has often risen in a wave, and it is currently in a sideways period, and the future is not up or down, and it is possible to continue to make money, or it may encounter the loss of profits.
Everyone wants to escape from the top, they all want to sell at the top of the market or the top of the stage to get the maximum profit, and they are also afraid of encountering the first prison, spit back the previous profits and put the principal in.
Options are a great financial tool designed to deal with this situation, and it can be used in both directions to get better protection with fewer fees, avoiding the risk of betting on the wrong market direction.
For example, if you know that the market is currently in a bull market, and according to the historical bull market, the crazy time is no more than 3 months, then you can buy put options every month for insurance after the market has risen for 3 months.
Take 5% of your profit out to buy a put option, and once it is really ** later, you can exercise it with **, whether it is an **asset or a sell exercise, it is very cost-effective.
At the same time, you can also sell call options, once the underlying continues to rise, you can also continue to make profits, and the two options can also be hedged, thus reducing your costs.
However, playing options requires a certain amount of financial knowledge, and many times the biggest cost of making money is actually the cognitive cost, and it is difficult to make a lot of money with things that everyone knows.
Here's the explanation given by ChatGPT::
Buying a put option is an options trading strategy through which an investor expects to profit from the underlying asset.
In options trading, a put option gives the holder (buyer) the right, but not the obligation, to sell a certain amount of the underlying asset (e.g., **, commodity, etc.) at a specific ** (execution**) at a certain future date (expiration date).
When you make a put, you are actually buying the right to sell the underlying asset from the put seller at a specific time in the future.
If, at the time of expiration, the market of the underlying asset is below the strike of the option, you, as the buyer of the put option, may choose to exercise the option and sell the asset at a strike above the market.
You can then immediately buy back the same asset at a lower market, thus profiting from the difference between market and execution.
Of course, in practice, most options traders will choose to sell options directly in the options market to lock in profits, rather than actually exercising the options and dealing with the underlying assets.
Sell a call option.
Open a position to sell a call option: When you sell (write) a call option, you are essentially creating a new option contract, committing that you will sell the underlying asset as agreed upon if the buyer chooses to exercise the option before the contract's specified execution and expiration dates.
As the seller, you will receive the premium paid by the buyer immediately. This action is to create a new open contract in the options market without waiting for someone to make a bid.
Option expiration or close trade: Once you sell a call option and open a position, this contract will exist until it expires or is closed.
The buyer of an option has the right to decide whether to exercise the option before expiration (if the option is American-style).
If the option expires at a real value (i.e., the market is higher than the strike), the buyer may exercise the option, at which point you, as the seller, are obligated to sell the underlying asset.
If you want to close your ** before expiration, you can close the position by buying an identical call option through the market, so that two trades in opposite directions cancel each other out.
In summary, when you sell a call option, you lock in the trading conditions at the beginning of the contract and receive a premium, rather than waiting until someone makes an offer or the option expires to sell.
The obligation to sell the underlying asset is contingent upon whether the buyer of the option chooses to exercise the option and whether the option expires at a real value.
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