Here’s a step-by-step guide on how to buy a put option on your mobile device. In the example above, we use the Interactive Brokers mobile app. But all major brokerages that support options can do the same thing (ThinkOrSwim, E-Trade, TD Ameritrade, etc).
When to Buy a Put
Buy a put when you believe the market will move quickly down. Remember, that when you buy a put option, every day that the market does NOT move down, you lose theta value of your options — that’s time decay. This is especially pronounced during the last 2 week’s of expiration — and especially true on the Thursday before expiration and Friday day of expiration.
So when buying puts — it is critical that your timing AND direction are correct.
In general, this is a lower probability trade — simply because on a percentage basis, the market doesn’t spend that much time quickly moving down. The majority of the time, the market is either neutral, moving up, or moving down slowly. Puts are only for when the markets are moving fast—faster than what the implied volatility of those options are suggesting.
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