What Is a Down-and-Out Option?

A put option is also called a "put option" or "knock out". Within a certain period of time, the right to sell certain securities at the agreed price and quantity is one of the types of option transactions. symmetry. After purchasing and selling options, customers have the right to sell certain securities to the purchasers of options at the price and quantity stipulated in the contract within a specified date or period. The scope of its use is generally that people are willing to buy and sell options only when there is a downward trend in the securities market. Because, during the validity period of the sold option, the buyer can only make a profit by exercising the option after the price of the securities has fallen to a certain extent. For example, a customer bought a stock option with a validity period of 3 months, the price per share is 15 yuan, the quantity is 1 million, and the option fee is 100 yuan per lot. In these 3 months, if the stock price drops to 10 yuan per share, the customer exercises the option to sell the stock. At this time, the difference between the stock market price and the agreed price is 5 yuan, deducting 1 yuan from the option fee, 4 yuan per share, and 40,000 yuan for 1 million. In addition, because the option is transferable to the buyer, if the stock market is bearish, causing the option premium to rise, the customer can directly sell the option, so that he not only earns the difference between the premium before and after the option premium, but also It also transferred the risk of a sudden rebound in the stock market. But if the stock market maintains the level of 15 yuan per share in these 3 months, there is no decline, and even gradually rises. Here, customers exercise options, sell stocks or transfer options, not only unprofitable, but also Loss option premium. Therefore, sell options are generally only used when the stock market is bearish. ^[1]

Put option

A put option is also called a "put option" or "knock out". Within a certain period of time, the right to sell certain securities at the agreed price and quantity is one of the types of option transactions. symmetry. After purchasing and selling options, customers have the right to sell certain securities to the purchasers of options at the price and quantity stipulated in the contract within a specified date or period. The scope of its use is generally that people are willing to buy and sell options only when there is a downward trend in the securities market. Because, during the validity period of the sold option, the buyer can only make a profit by exercising the option after the price of the securities has fallen to a certain extent. For example, a customer bought a stock option with a validity period of 3 months, the price per share is 15 yuan, the quantity is 1 million, and the option fee is 100 yuan per lot. In these 3 months, if the stock price drops to 10 yuan per share, the customer exercises the option to sell the stock. At this time, the difference between the stock market price and the agreed price is 5 yuan, deducting 1 yuan from the option fee, 4 yuan per share, and 40,000 yuan for 1 million. In addition, because the option is transferable to the buyer, if the stock market is bearish, causing the option premium to rise, the customer can directly sell the option, so that he not only earns the difference between the premium before and after the option premium, but It also transferred the risk of a sudden rebound in the stock market. But if the stock market maintains the level of 15 yuan per share in these 3 months, there is no decline, and even gradually rises. Here, customers exercise options, sell stocks or transfer options, not only unprofitable, but also Loss option premium. Therefore, sell options are generally only used when the stock market is bearish. ^[1]

Chinese name

Put option

Foreign name

put option

Also known as

Put option

Types of

right

Put option, also known as put option, means that the buyer of an option has the right to sell a certain amount of financial assets at the agreed price within the agreed period.