What is a put option.
Think of a put option as insurance against a stock that you buy. That sounds pretty good, right? Well, there are positives and negatives.
Here's the basic idea:
A put option gives you the ability to sell a stock at the price you want to sell it at, so even if the price falls, you can still profit. That sounds pretty amazing, doesn't it? Well, it's not so simple.
We know - you're thinking: 'This is about ton get way too complicated. I'm out.'
Don't be out. You'll get it in one minute and you'll be a smarter investor.
Think of it this way:
You buy a house. The house falls apart because of a horrible storm. The property is worth absolutely nothing. But you don't have to realize that lost value (and you did pay good money for that property).
You have insurance. A new house is built and you didn't have to buy a new one. Maybe the new house can reach the value your old house was priced at before it fell apart.
Put options are similar.
Want to see how they're similar? Watch the video above. You'll be a pro in two minutes.