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Dendreon Anonim Ortaklik Message Board

  • hsangha56 hsangha56 Feb 15, 2013 10:06 AM Flag

    MAY 2013 $ 3.00 PUTS...

    CAN SOME ONE EXPLAIN IN LAY TERM! THANKS!

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    • each contract is for 100 shares so multiple the price of the option x100. a put option is the right to sell at a strike price- in this case at $3.00 . when you purchase a contract and you have one hundred shares, you have the right to sell your 100 shares covered by this option should the price fall below 3.00 prior to the expiration date in May, So add cost you paid for this option then you have off-set the risk of the price falling further. If you do not have any share the value of the contract may increase in value as the price goes down so long as there is still time left. However if the stays above 3.00 and the time runs out the option will expire and is worthless. If you sell this option you have the obligation to purchase 100 shares at 3.00 should the owner of that option contract want to exercise the sale - if you want to purchase 100 shares anyway and are willing to wait you could count the contract as a discount if it is exercised. This is a good plan if you expect the price to fall so long as the price does not fall too far below 3. If the price remains above three- you keep the money that was paid to you less the buying commissions for the option. But remember If the prices goes way below- 3 you will could required to buy 100 shares at whatever price - Hope this makes some sense hard to see what one is writing in this little block