Why Options - Put

Hello All,

I have some basic questions regarding the Options fundamentals.
In case of Options - Put, You make the money when market goes down. Then in current bearish market, why would someone write Put options at all... ? Do a option writer can balance the Put options load when the market is bearish. As whole world economy is going down, does it make sense to have Put option...

Thanks,

hzzg6y

Nice question... But just think if the markets were to go down only... why would any1 buy a Future as well ?

Ppl may Sell put option to hedge their shorts or maybe they think it wont go down below a certain level during a certain time frame... Thus they sell the option.

cheers

I could not understand what to you mean by hedge their short.

Consider that I am Option writer ... I guess essentially I have write equal put & equal Call. Suppose there is more load on Put then I am certainly in loss in current bearish market. ? Please clarify with examples.

This website is contains good basic material regarding option (told by ghoshji originally)

http://www.888options.com/

Well yeah thinking something lyke that... ill try my best to do something over this weekend if i get some time off like today.

Options have limited life. And there is limit till which market can fall in that limited time window. People do their own calculation and form their opinion and accordingly they sell puts to collect premium. 85 to 90% option expire worthless.. so the writer of those 85 to 90% options end up keeping the premium.

Moreover, there are short term upmoves in the market when major trend is still down.
To play that short upmomve, selling puts doesn't harm much.
So it depends upon individuals view about the market and where they see opportunity.

Happy Trading.