Buy To Open Put Example -

A "Buy to Open" (BTO) put order is the classic way to bet against a stock or hedge a position you already own. When you execute this trade, you are paying a premium to acquire the a specific stock at a set price. The Scenario

Your right to sell at $95 is now very valuable. The option is worth at least $15 per share ($95 strike - $80 market price). buy to open put example

The price at which you have the right to sell the stock. A "Buy to Open" (BTO) put order is

Your maximum risk is capped. You simply lose the $200 you paid to open the position. Why Traders "Buy to Open" Puts The option is worth at least $15 per

Strike Price minus Premium (In this example: $93).

You wouldn't exercise your right to sell at $95 if you can sell on the open market for $110.