From the course: Understanding Capital Markets

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Put options and stocks

Put options and stocks

From the course: Understanding Capital Markets

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Put options and stocks

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- [Instructor] Another investment choice you may run into after you get started investing is a put option. A put option gives you the right but not the obligation to sell a stock at a particular price. It gives you the right to sell that stock at some given price for a period of time in the future. Now I'm on the E*TRADE site and again, options are reported in a variety of places, but E*TRADE is kind of convenient and we're looking at options for General Electric under the options tab. Now on the right-hand side of this chart, we see put options. The value of the put options is driven by this column in the center called strike price. The strike price tells us what price you're guaranteed to be able to sell your General Electric stock at. You can think about a put option as kind of like being in an insurance contract. No matter what happens, if GE falls to $5 per share, you, the owner of GE stock and the owner of this put…

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