What is the difference between buying a put and selling an option?

Buying a put: You have the right to sell a security at a predetermined price. Selling a put: You have an obligation to buy the security at a predetermined price from the option buyer if they exercise the option. Conversely, buying a put option gives the owner the right to sell the underlying security at the option exercise price.

What is put selling & how does it work?

Put selling means entering into a contract with a put buyer in which the buyer pays you a small amount of money (a “premium”) in exchange for the right, but not the obligation, to sell an underlying stock to you at a specific “strike price,” on or before a specific “expiration date.”

How do you sell a put option?

Sell a put option with a strike price near your desired purchase price. Have on deposit in your brokerage account an amount of cash equal to the potential obligation. Collect (and keep) the premium from the sale of the put, while you wait to see if you will buy the stock at the lower price.