The answer is yes with the help of options! While buying options can protect a stock (see here), buying options can also lock-in a profitable position to ensure the position will never lose.
Let say we purchase Apple stock at $120 and the stock moves up to $130.
We buy a Put options by paying say $2 at $128 strike to lock-in our profitable position.
1) If Apple stock drops to $100
a) Stock - We lose $20 ($120 - $100)
b) Put Options - We profit $26 ($128 - $100 -$2)
c) Our net position - We profit $6 ($26 - $20)
2) If Apple stock drops to $50
a) Stock - We lose $70 ($120 - $50)
b) Put Options - We profit $76 ($128 - $50 -$2)
c) Our net position - We profit $6 ($76 - $70)
3) If Apple stock rises to $140
a) Stock - We profit $20 ($140 - $120)
b) Put Options - We lose $2 (Put Options OTM and become worthless, we lose our premium paid)
c) Our net position - We profit $18 ($20 - $16)
4) If Apple stock rises to $180
a) Stock - We profit $60 ($180 - $120)
b) Put Options - We lose $2 (Put Options OTM and become worthless, we lose our premium paid)
c) Our net position - We profit $58 ($20 - $16)
Using options to lock-in a profitable position creates a peace of mind. :)
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