Name: Long Put
Setup: Buy (long) a put
Bias: Bearish
Break-Even: Strike – Price paid for call
Max Profit: Limited: Underlying cannot fall below $0.00
Max Loss: Limited: Price paid for the put
Margin: No margin needed since put is bought outright
Time Decay: As time passes the put will drop in value. To offset rapid time decay typically put options are purchased 60-150 days from expiration.
Implied Volatility: Over the life of the option you want implied volatility to increase, thus increasing the price of your option. A decrease in implied volatility will lower the price of your option.
Notes: Purchasing puts deep out-of-the-money because they are cheap will typically result in losses. The purchase of puts is also used as protection against long stock. If you are currently long stock and want to protect or lock in gains from future decline you can purchase a put that will cover any downward movement below the strike price.
Featured in Trade Reviews: None at this time
Welcome to Swing Trading the Stock Market Podcast!
I want you to become a better trader, and you know what? You absolutely can!
Commit these three rules to memory and to your trading:
#1: Manage the RISK ALWAYS!
#2: Keep the Losses Small
#3: Do #1 & #2 and the profits will take care of themselves.
That’s right, successful swing-trading is about managing the risk, and with Swing Trading the Stock Market podcast, I encourage you to email me (ryan@shareplanner.com) your questions, and there’s a good chance I’ll make a future podcast out of your stock market related question.
Emotional trading will destroy one’s portfolio. Aiming to hit home runs with every trade is a sure sign that the trader is overly emotional and only cares about fast money. In this podcast episode Ryan explains how chasing after stocks like MicroStrategy (MSTR) without a plan for managing the risk can ultimately ruin a trader’s attempt at being a successful swing-trader.
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*Disclaimer: Ryan Mallory is not a financial adviser and this podcast is for entertainment purposes only. Consult your financial adviser before making any decisions.
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