So I believe a stock is going to fall, and want to buy some very bearish put contracts. I dont have anywhere near enough cash to exercise the contracts if I'm right. The goal would be to sell the contracts before expiration for a profit.
My understanding is that all I am risking is my initial capital, which I could lose 100% of, but that is the limit on my potential losses. Is that correct?
I guess the one thing I am not 100% clear on and haven't had luck googling is : when I buy a put option, then sell it back later, that doesn't put me on the hook in the same way as the original put writer does it?
Thanks in advance for any help.
Submitted February 17, 2017 at 12:45PM by WISmaster http://ift.tt/2kRPF8t
