In effect, a guarantor of a funded pension is offering a put option (the right to sell something at a pre-determined price) to individuals.
A chief reason is the flowering of the options market, which makes it possible to bet on lower prices by simply buying a put option, the right to sell shares for a specified price and period.
You can also take measures to lower your risk, such as buying a put option (a right to sell at a specific price) on FXI as long as 18 months out, before buying FXI.
The first is the listed variety, such as call options (the option to buy) and put options (the right to sell) written on shares in the stockmarkets.
On the other hand, a bearish investor who buys put options — the right to sell a specified block of shares within a specified time at a predetermined price — can produce either long-term or short-term profits (or losses) depending how long the put or the underlying stock is held.
It has arranged with investment bank Lehman Brothers to sell its stake by buying a put option - the right to sell 25m shares at a certain price.
Mr. Overby said he saw both bullish and bearish assumptions in the trading, but he noted that the July 25 put option, giving a right to sell, showed 13,000 contracts traded, providing speculation that the stock would go down to the $25 level before that option expired.
On the other hand, the party that buys a put option has the right to receive the asset at the negotiated price at the expiry date of the contract after exercising the option.
Shaw Group Inc. : Late Thursday afternoon, when shares at power-plant builder Shaw Group were trading at $31.31, an investor paid just 70 cents to bag 2,500 put options securing rights to sell shares in the company at $32 each.
Then buy a put option giving you the right to sell 100 shares at a strike price of $100 in March 2006 for a premium of around $300.
A put option gives you the right, but not the obligation, to sell (to put) your stock during the contract's term at the specified strike price no matter how low the market price may have fallen.
