Put Premiums on my Watch List Now at 32.25% Annualized Yield

[william the wie]

That means a crash is effectively impossible until optimism hits.

 

[USApatriotz]

That means a crash is effectively impossible until optimism hits.

Can you please expound on that & explain how Put premiums work?

Thanks

 

[william the wie]

A put allows the buyer to sell a round lot the put writer. In order to sell shares in, say, GM to the GM put writers the put buyers have to the put buyers have to buy GM stock shares. More bids on GM will drive the price up.

 

[USApatriotz]

A put allows the buyer to sell a round lot the put writer. In order to sell shares in, say, GM to the GM put writers the put buyers have to the put buyers have to buy GM stock shares. More bids on GM will drive the price up.

So a lot of bids on GM puts could signal a bearish outlook for GM?

 

[william the wie]

A put allows the buyer to sell a round lot the put writer. In order to sell shares in, say, GM to the GM put writers the put buyers have to the put buyers have to buy GM stock shares. More bids on GM will drive the price up.

So a lot of bids on GM puts could signal a bearish outlook for GM?

unfulfilled bids, quite possibly, yes. However I stick to the outstanding put/call ratio and put premium over market price because I can and do run the numbers on those. Since I don't how to calculate margin of safety on unfulfilled bids I cannot be definitive.