Buy To Open Put Example Apr 2026

Your right to sell at $95 is now very valuable. The option is worth at least $15 per share ($95 strike - $80 market price).

You wouldn't exercise your right to sell at $95 if you can sell on the open market for $110. buy to open put example

If you already own 100 shares of XYZ, buying this put acts as an insurance policy. No matter how low the stock falls, you are guaranteed the ability to sell at $95. Your right to sell at $95 is now very valuable

Your maximum risk is capped. You simply lose the $200 you paid to open the position. Why Traders "Buy to Open" Puts If you already own 100 shares of XYZ,

The price at which you have the right to sell the stock.

Strike Price minus Premium (In this example: $93).

If you hold until expiration, the option expires worthless, and you lose your $200 premium. 3. The "Wrong" Call (Stock Rises) The stock rallies to $110 .