In this article, we will explore the intricacies of financial decision-making and how to protect your investments in the stock market. We’ll delve into various heuristics and cognitive biases that...
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How to Get Stocks at a Discount Using Options
14/11/2023
In this article, we’ll explore a more advanced topic: the options market and how you can leverage options to purchase stocks at a discounted price. Did you know that using options to buy stocks at a discount can be a straightforward and beneficial strategy? However, it’s crucial to recognize the associated risks and employ this tactic as part of a comprehensive plan. For example, let’s say you’re eyeing a stock trading at around $10, and its value keeps rising without providing an opportunity for you to buy during a pullback. In such a situation, you can examine its options and find that its puts with a strike at $9 cost $1 (note that these numbers are hypothetical). Now, you have the option to short the put and retain its premium of $1. Here are your two choices: It’s essential to remember that you already earned $1 from shorting the put.
