THREE WAYS TO BUY A STOCK

THREE WAYS TO BUY A STOCK Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options Seminars are provided to you for educational purposes only. No information presented constitutes a recommendation to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. Pro Market Advisors do not offer or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or investment strategy, and you are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objections, risk tolerance and liquidity needs. For more information please visit our website:

BUYING CALLS ADVANTAGES Increased leverage Defined risk Unlimited reward

BUYING CALLS DISADVANTAGES Decaying asset – time loss Requires directional price movement Loss of dividend Delta

BUYING PUT OPTIONS A PUT option gives you the right to sell the stock. You choose the selling price. This helps protect you against extreme loss - like an insurance policy. This selling price is the STRIKE PRICE

BUYING PUT OPTIONS Strike > Trade = In-the-Money Strike = Trade = At-the-Money Strike < Trade = Out-of-the- Money

BUYING PUT OPTIONS You get to choose how long you want the protection to last. Like a life insurance policy, the PUT option will eventually expire. After the EXPIRATION date, the option is no longer valid.

BUYING PUT OPTIONS Each option contract represents 100 shares of stock. So if you have 1000 shares of stock, you need 10 PUT contracts to protect your position.

BUYING PUT OPTIONS You have to pay for the right to sell the stock for the strike price. The cost of the PUT option is called the PREMIUM.

PUT OPTION PREMIUM What affects the PUT option premium? Higher strike prices cost more than lower strikes (INTRINSIC VALUE) More time before expiration costs more (TIME VALUE) Higher volatility in the stock price costs more. It costs more to insure something with a higher risk of loss. Intrinsic value Time value

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