Now that we have given you the steps to Buy Puts, let's go through an example. The stock you are going to use for this example is 3Com, Inc. (COMS).

This example comes from the CallsAndPuts.com "Buy Puts" data. Let's go through the procedures step-by-step:

1) You select COMS from the "June Buy Puts (Tech)" listing:

2) You select COMS based on the criteria you've established for a good Buy Put candidate (This differs for each option investor based on risk versus reward criteria).

3) Let's assume you've read the latest news on COMS and it appears quarterly earnings will not meet analyst's expectations.

4) You access the Stock, Option, BB&RSI links and based on your risk versus reward criteria determine that COMS is your put option investment choice.

5) Let's also assume that you have an account with ETrade and want to place your order for the buy put option position.

6) Once you log into your account on www.etrade.com, access the Trading > Enter Option Order link. 

7) Place your option order for 5 contracts by selecting the following fields:

8) This purchase of COMS is for control of 5 contracts at market price (representing 500 shares of underlying stock that you could sell or "put" to someone).  If you want to have your purchase execute at a specific put option price, select the "Limit" radial button and enter the price.  

9) Buying put options requires the investor to watch the option price throughout the expiration period.  When the underlying stock has declined and the put option price has appreciated to a price that satisfies you, then the put option position should be closed.  This can be done with the following menu selections.

10) The difference between your original "Buy Open" put position and your "Sell Close" put position is your profit or loss.

CoveredCalls.com

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