I am considering a strategy to basically protect myself from severe downturn as in GFC and am looking at put options as a way of as is described by some taking out insurance on your shares.
last price $15.00
say i buy 10,000 @ $15.......$150,000
say i buy a 12 month put option for strike price of $15
Cost say $2500
Total outlay 152500.
now my understanding is that i have the right to sell but not the obligation.
So 7 months three things can happen
-price has gone up to $25.....here can i sell and take the profit or onsell the put option not clear in this area...redo another option for same strike price $25 12 months out for a premium cost of say $3000
-price the same......here dont need to do anything if i chose not to
-price down to say $5....here i can sell if i want for $15
Is there any other risks than the premium of the put option.
*Where can i find the volume etc on asx for options of companies say top 50 or other.