Intro to Options

Implementation

Onboarding

Long Put

The payoff graph of a long put position is below:

Let’s re-run the three scenarios described in the previous section, this time comparing the purchase of the JAG June 30th 90 strike put for $5, against short selling one JAG token. Reiterating, the scenarios are:

- 1.The price of JAG rises to $130
- 2.The price of JAG remains at $100
- 3.The price of JAG falls to $70

- If Alice had short sold one JAG for $100, she'd lose $30 (-30%).
- If she had bought the put, she would lose the $5 premium as the asset price is greater than the strike price (-100%).

- If Alice had short sold one JAG for $100, she would remain flat.
- If she had bought the put, she would lose the $5 premium paid for the put (-100%).

- If Alice had short sold one JAG for $100, she'd make $30 (+30%)
- If she had bought the put, she could exercise the put to sell JAG at $90 and buy it back for $70. After factoring in the put premium, this is a profit of $15 (+300%).

Last modified 6mo ago

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