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  • Why I Sell Put Options (Part I) [View article]
    Both A & B go down 5, you lose 10
    The put seller loses 8

    On Jul 20 07:34 PM mtd wrote:

    > How this can go wrong:
    >
    > Stock A and B are trading at $10. You buy both at market. Stock A
    > loses $5 and Stock B gains $10.
    >
    > Your portfolio gains/losses
    > Stock A ($5)
    > Stock B $10
    > P&L $5
    >
    > If you had done this with selling puts @ $9 (say for a $1). Since
    > Stock B took off, you would have never purchased it. Stock B on the
    > other had has dropped and you have been forced to pay $9 for it.
    >
    >
    > Your portfolio:
    > Stock A ($4)
    > Put premium $1
    > P&L ($3)
    Jul 20 21:36 pm |Rating: +2 0 |Link to Comment
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