How Do You Buy Puts On Stocks?
A put (or put option) on stocks is a contract that entitles you to sell a certain number of shares of a stock at a stated “strike” price within a specified time. You may exercise a put on stocks until the option contract expires, but you aren’t required to do so. Investors buy puts on stocks for two reasons. One is to protect an investment in the stock itself, which is called the underlying security. Traders also buy puts when they think a stock is likely to decline, in order to make a profit. Step 1 Open a brokerage account that lets you trade options. Options exchanges like the Chicago Board of Options Exchange don’t require you to have a margin account (one with borrowing privileges) for basic options transactions. But some brokerage firms do have this rule. To open a brokerage account, you’ll need to provide your Social Security number and place of employment, along with personal information. For margin accounts, you must also furnish a statement of your income and assets, and your
