# What is the meaning of "writing put options"?

"Write" means sell to open. It is called that because options writers are creating (i.e. writing) new contracts. No such thing as "reading" an option.

Apple closed Friday 9/23 at $403.40. This is what the Puts look like, note the 2013 expiration. (The rest is hypothetical, I am not advising this.) As a fan of Apple and feeling the stock may stay flat but won't tank, I sell you the$400 put for $64.65. In effect I am saying that I am ready willing and able to buy aapl for$400 (well, $40,000 for 100 shares) and I have enough margin in my account to do so,$20,000. If Apple keeps going up, I made my $6465 (again it's 100 shares) but no more. If it drops below$400, I only begin to lose money if it goes below \$335.35.

You, the put buyer are betting it will drop by this amount (more than 15% from today) and are willing to pay the price for this Put today.

"Writing a put" for a stock means you are selling the right to sell you stock.

Simply put (er no pun intended), "writing put options" means you are selling somebody else the right (a contract) to sell YOU a specific stock at a specific price before a specific date. I imagine the word "write" to refer to the physical act of creating a contract.

The specific price is called the STRIKE and the specific date is the EXPIRATION. By "writing a put", you are agreeing to purchase the stock at a particular price (the STRIKE price) before the expiration. You get paid a fee, the "premium", for agreeing to purchase the stock at the strike price if asked to. If the holder of the contract decides to make you buy the stock at the strike price, you have to do it.

If the stock never dips below the strike price, then the holder of the put contract (a contract you wrote), will never exercise their right because they'd lose money. But if the stock drops to zero, you could potentially lose up to your strike price (times the number of shares at stake), if the holder of the contract decides to exercise.

Therefore, "writing puts" is a LONG position, meaning you stand to gain if the stock goes up. FYI - "LONG" refers direction (UP!), not duration.