American put options | Finance & Capital Markets | Khan Academy

American Put Options. Created by Sal Khan.

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Finance and capital markets on Khan Academy: Options allow investors and speculators to hedge downside (or upside). It allows them to trade on a belief that prices will change a lot--just not clear about direction. It allows them to benefit in any market (with leverage) if they speculate correctly. This tutorial walks through option basics and even goes into some fairly sophisticated option mechanics.

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[insanecow]

I learn so much more from Khan's videos than from those Investopedia videos where the guy talks like an auctioneer and that spastic music plays in the background

[SurmanSingh]

wow understood in less than 3 mins. i really like your videos

[haydenruggiero]

Love your videos! Thank you for posting. In the example, you have the option to sell the stock at $40 as the price is decreasing below $40. You may have the option to sell the stock at $40 but who would buy it at that price if it’s anticipated that they could get it for less? Thanks!

[krishnanair]

You could put stoploss our your short or regular sale right?

[billnotice]

Great video. Now as the Cowardly lion said " if I only has some Courage!"

[rogjerr]

Explain how Put is used with Short Sell to mitigate losses??

[TriNguyen-xiji]

It is really hard to follow without showing your cursor.

[trevorwilliams]

lets say there is a company you like, however you predict they will loose value. Would it harm that company to short it or use a put option?

[charronfamilyconnect]

**Correct me if I am wrong cause I never participating in the casino arena of investing in stocks while excercising options, but I thought puts were used by people who don't necessarily own the share itself but borrow others (naked shorting) in hopes that the price goes down on the stock, and they technically sell at the higher price, but technically buy it at the lower price and profit the difference? Isn't this how most puts are used today instead of as an insurance program?? Also isn't this kind of like an immoral game when played this way as it often results in many stocks being hammered which affects other share holders as well because those who own many shares and have the financial means to manipulate the markets can often swoop in and cause this ripple effect to occur almost instantly. Also at the same time this kind of manipulation is allowed to happen freely, with not much oversite. This behaviour makes me question if integrity, and honesty, and true value exists anymore, and if share prices are based on any real true measurable value based on companies actually creating more value for their customers or based simply on irrational and intentional immoral behaviour of market movers and shakers? Makes me want to stay clear of the casino world of stock investing. I much rather invest in main street than wall street where my money actually does good for my community**

[gabecodina]

BUT in the real world you do not exercise your options you just sell to close.

[chris]

Quite literally you still have an option

[tarisaivambe]

Hi Khan,

Question does a participant of put options require to own shares in order to buy a 'put option'?

Tari

[fleshcookie]

even if you can sell it, who would buy it? 

[teenyverse]

You really don't need to be mentioning the difference between American and European

[brown]

This is a joke! You missed it Whoever left me a comment! Now... back to "Kahn!"

[ballermilw]

Its not as complicated as you're making it sound.

[tacojoe]

Sal, most of your videos are stellar, but this one is just awful. Thankfully I already understand how put options work.