A ONE-STOP PORTAL OF INFORMATION FOR FUTURES AND COMMODITIES TRADERS
A short put is an options trade in which the seller
conveys to the buyer the right to sell, or go short,
futures at a specific price for a specific period of
time.
In this example, the writer of the put
option is obligated to buy the underlying crude oil
futures at $18 a barrel, or gold futures at $250 per
ounce, at any time up to expiration, if a holder of an
options contract chooses to exercise it. The position
realizes maximum profits if crude oil futures are
trading at $18 or above, or gold is trading at $250 or
above at expiration, making it unlikely that the options
contract will be exercised. Profits are limited to the
premium received, while risk is theoretically unlimit
