A long put is a derivative product that protects a stock or portfolio from a downfall in price because puts gain in value when the underlying goes does in value. This counteracting feature for puts makes them ideal for protection. In order for this protective put to work, you should buy to open. This works like buying an insurance contract for your portfolio. Buying a put is the same thing as buying a long put.

Tips for Options

Some tips for buying options include, having an expiration greater than or equal to six months in the future, making sure to buy during normal market activity and to buy the strike price that has the most open interest.

You will want to buy the put when the market is not moving to lower the overall cost to the position. In addition, buy an option with highest open interest, which is at least six months out until expiration. This will ensure that you may offset your position successfully as well as fully protect your stock or portfolio during the ensuing trading days after purchase.

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