[center][b][size=5]How to Make Money Using Put or Call Options[/size][/b][/center]
Many new investors are unaware of making money using put or call options as well as insuring their investments against unfavorable market movements in the world of financial markets these days.

Put and call options can be used to either make speculative cash or just insure the value of your investment. Mainly this article will discuss how to use put and call options to protect the value of your investments with unfavorable market movements and how to make money in these conditions. This article is written in order to educate new and young investors in the speculative market of stocks on how to minimize their losses while maximizing their returns.

Firstly, let us discuss how to use a put option to make a profit in the stock market as well as safeguard your investment. For the technically minded, a put option is the right to sell the stock of a predetermined company in the future at a price determined today. Let us take a hypothetical stock, XYZ as an example in order to explain how to make money using a put option as well as safeguarding your investment. If you own 1000 units of shares of company XYZ, then to safeguard the value of your investment, you will just need to buy a put option. Let us say that stock XYZ is currently selling at $17 a share and you believe that the price will plunge to $15 in three months time, then, we buy a put option that gives you the right to sell at $17. Of course we will need to incur a certain transaction fee which is known as a premium. A premium for buying a put option is usually 20 cents per share. So, in our case we need to pay $200 to buy the put the option. If the price of stock XYZ does drop to $15, we exercise our put option and sell it at $17, thus making a profit of $1800 ($2000 - $200), thus making money while the price of the stock goes down. So what happens if the price of the stock rises instead of falling? Well in that case, we will not exercise the option and sell at the market price and incur a loss of $200. So, the maximum amount of loss that one can incur using a put option is $200(in the case of our hypothetical stock), while the potential gains is limitless.

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