The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re answering the question, “Is a put option the same as short stock?” We get this question always and people are often confused when they start looking into or exploring options trading, wondering if a put option is the same as short stock. Now, while both of these things might behave very similar, they of course are not the same thing. Short stock carries a lot of additional capital requirements and is truly short the underlying stock security which means that it has a negative Delta of one which means that if the stock goes down by $1, then the short stock should profit by $1 as well. With a put option on the other hand, you're basically taking a leveraged position in potentially short stock and it doesn't necessarily mean that the put option will move in parity with the short stock. Oftentimes, we find put options that have a Delta of say 50 and so, as a result, when the stock goes down by $1, the put opti