CALL ON A PUT Meaning and
Definition
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Call on a put refers to the option strategy where an investor who owns a put option exercises their right to sell the underlying asset at a predetermined price, known as the strike price, during a specific time period. This action is taken when the option is in-the-money, meaning the current market price is below the strike price of the put option. By exercising the put option, the investor can profit from the decline in the value of the asset.
When an investor exercises the put option, they are essentially "calling" on the counterparty (usually the writer or seller of the put option) to fulfill their obligation to buy the asset at the strike price. This allows the investor to sell the asset at a higher price than the current market value, resulting in a profit.
Call on a put is commonly used in options trading as a risk management tool to protect against potential losses in the event of a decline in the price of the underlying asset. It provides the option holder with the ability to sell the asset at a predetermined price, regardless of the market conditions. This strategy is particularly popular in bearish or downward trending markets, as it allows investors to benefit from falling prices.
Common Misspellings for CALL ON A PUT
- xall on a put
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- fall on a put
- dall on a put
- czll on a put
- csll on a put
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- cqll on a put
- cakl on a put
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- calp on a put
- calo on a put
- call in a put
- call kn a put
- call ln a put
- call pn a put
- call 0n a put
- call 9n a put
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