Puts and Calls- some explanation please- a question specifically dealing with PUT concept-?

Question

Here is a question that I have perhaps someone here can shed some light.

The example will deal with PUTS- I have a contract that expires today.. It is a 20 PUT.. The stock is trading at 22 dollars.

I can not sell the put- I suppose that is because it is out of the money and there is no time left. NOte- this does give me the right to sell 100 shares of X at the strike?

Now, what happens if the 20 dollar put is in this scenario- same thing, expiration today. Stock now trading at 18... Would I be able to sell the put?? even with so little time?? Why would anyone buy it?How does the PUT buyer, the person who will buy my PUT benefit from this?? So this would be like me saying I will sell 100 shares of X at 20, 2 dollars above the strike?

ALso important part of my question.. with above example--- if there is a buyer for my put, would that be the same as I was when I originally bought the put? In other words the new buyer would be "a put buyer" with the right to sell at 20 strke?

Answer 1

very good.

the buyer of the 20 put if the stock is selling at 18 would likely be a guy who wrote (created) the put in the first place. he is closing his position and doesn't want to actually own the stock.

options aren't real -- for every one in one direction, there is someone who is in exactly the reverse direction in the same instrument. if you're long on puts, someone is short them, etc.


:-)

Answer 2

you wound up asking 4 questions.

puts and calls allow you to sell or
buy stock options.