Put options don't make sense - GoFuckYourself.com

MrMaxwell · 03-23-2013, 05:44 AM

So if they supposedly give you a "right to sell at a set price even if the price goes down", then, who is going to be forced to pay that higher price? What, are they sending all of those out of work floor traders out to kidnap and mug people?

slapass · 03-23-2013, 05:49 AM

The other side pays and you collect that is true of a put option or a call option.

EddyTheDog · 03-23-2013, 05:51 AM

Quote:

Originally Posted by MrMaxwell

.... What, are they sending all of those out of work floor traders out to kidnap and mug people?

It looks like the bankers are mugging people directly these days...

MrMaxwell · 03-23-2013, 05:51 AM

Quote:

Originally Posted by slapass

The other side pays and you collect that is true of a put option or a call option.

Well, I was thinking that they must have to be matched some way, but if the guy on the other side has a call option- and doesn't exercise it (why would he) ... how does it end up matching?

MrMaxwell · 03-23-2013, 05:52 AM

Quote:

Originally Posted by EddyTheDog

It looks like the bankers are mugging people directly these days...

That's for fucking sure
They are so crooked on so many levels it's just difficult to imagine it being real

ilnjscb · 03-23-2013, 06:28 AM

same as a short sale, you have to buy at any price t pay back the share you borrowed.

when the market crashed in 2008, several banks were left without counterparties to their trades, but usually the bank is on the hook.

That is why large positions need to be monitored.

greg80 · 03-23-2013, 06:50 AM

For every option you buy or sell there is a counterparty. You pay them the premium.

Antonio · 03-23-2013, 06:53 AM

Quote:

Originally Posted by MrMaxwell

So if they supposedly give you a "right to sell at a set price even if the price goes down", then, who is going to be forced to pay that higher price?

The writer of the option.

slapass · 03-23-2013, 07:03 AM

Quote:

Originally Posted by MrMaxwell

Well, I was thinking that they must have to be matched some way, but if the guy on the other side has a call option- and doesn't exercise it (why would he) ... how does it end up matching?

When you bought it some one sold it. So you are long and he is short. It is a business like book making.

ilnjscb · 03-23-2013, 09:13 AM

same as a short sale, you have to buy at any price t pay back the share you borrowed.

when the market crashed in 2008, several banks were left without counterparties to their trades, but usually the bank is on the hook.

That is why large positions need to be monitored.

Houdini · 03-23-2013, 12:19 PM

Paper trade to test, but most likely you'll make more money selling options than buying them. Most of the time they expire worthless. Just make sure you can cover if they don't.

03-23-2013, 05:44 AM	#1
MrMaxwell Too lazy to set a custom title Industry Role: Join Date: Jul 2005 Posts: 10,057	Put options don't make sense So if they supposedly give you a "right to sell at a set price even if the price goes down", then, who is going to be forced to pay that higher price? What, are they sending all of those out of work floor traders out to kidnap and mug people?

03-23-2013, 06:50 AM	#7
greg80 Confirmed User Industry Role: Join Date: May 2007 Posts: 1,644	For every option you buy or sell there is a counterparty. You pay them the premium. __________________ Say no to GoDaddy and high renewal prices! Go with NameSilo - FREE private whois for life, $8.99 regstrations and renewals. Free redirects, emails, great control panel and more! NameSilo rocks!

03-23-2013, 05:49 AM	#2
slapass Too lazy to set a custom title Join Date: Nov 2002 Location: Earth Posts: 14,622	The other side pays and you collect that is true of a put option or a call option.

03-23-2013, 06:28 AM	#6
ilnjscb Confirmed User Industry Role: Join Date: Jun 2009 Posts: 8,859	same as a short sale, you have to buy at any price t pay back the share you borrowed. when the market crashed in 2008, several banks were left without counterparties to their trades, but usually the bank is on the hook. That is why large positions need to be monitored.

03-23-2013, 09:13 AM	#10
ilnjscb Confirmed User Industry Role: Join Date: Jun 2009 Posts: 8,859	same as a short sale, you have to buy at any price t pay back the share you borrowed. when the market crashed in 2008, several banks were left without counterparties to their trades, but usually the bank is on the hook. That is why large positions need to be monitored.

03-23-2013, 12:19 PM	#11
Houdini Confirmed User Join Date: Dec 2001 Location: SoCal Posts: 1,651	Paper trade to test, but most likely you'll make more money selling options than buying them. Most of the time they expire worthless. Just make sure you can cover if they don't.