In what way one can make profits by "Put" option ?

Question

Please illustrate

Answer 1

As with any equity, you make a profit if you sell a put option for more than you paid for it.

Excluding spreads, there are two ways to establish a put position.

(1) Bearish Position

You can buy a put option and if the value of the option goes up (either because the value of the underlying goes down or because implied volatility goes up) you can then sell the option to realize a profit.

(2) Neutral/Bullish Position

You can write (sell short) a put option and realize a profit if either you close the position for a lower price or if the option expires worthless.

Examples:

On 8/4/06 I sold 15 BSX Feb $17.50 puts for $3,285.50. On 1/30/07 I closed the position for $225.00, realizing a profit of $3,060.50.

On 8/21/06 I purchased 20 JBL Jan $25 puts for $5,800.00. On 3/23/07 I sold the puts for $7,699.88, realizing a profit of $1,899.88.

Answer 2

the option market is a very interesting and more difficult than stock market , where you can use it for investment OR risk management........

so you can make profit in the put option if the market price go down than strike price in amount more than the premium that oyu have already paid