Asked by Anonymous

What is SPY? Why do I keep hearing about SPY puts?

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  • Jonathan Chia Guangrong
    Jonathan Chia Guangrong, Fund Manager at JCG Fund
    Level 6. Master
    Answered on 20 Apr 2019

    There are several ETFs that track the S&P500 and SPY is the most popular of them all (to me).

    Now puts can be separated into 2 types, buy or sell. Same as for calls. A simple breakdown is as follows:

    Buy puts / sell calls - you are bearish about the stock/counter Sell puts / buy calls - you are bullish about the stock/counter

    When you buy an option, you pay a premium, and the opposite happens when you sell an option (you collect premium). Which is why I always prefer selling put as in general most of the stocks in my list go up. You earn an income from selling and you keep the premium when the option expires. You should only buy options when you are very sure about the direction of a stock. Else the premium you pay will drop in value.

    Hope this provides a bit of insight into options.

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  • Billy Ko
    Billy Ko, President - Investment Club at Singapore Institute Of Technology
    Top Contributor

    Top Contributor (Apr)

    Level 5. Genius
    Answered on 18 Apr 2019

    SPY is the code for SPDR S&P 500 whereby it tracks the S&P 500 and is offered by SPDR. Put = Sell, Call = Buy.

    Okay, I ain't no experts at Options. You could possibly read up on how options works but the underlying theory is to provide you the ability to exercise the option of possibly buying or selling the stock at a particular price. You may read up more about options here -- https://www.fool.com/investing/options/options-the-basics.aspx

    Or await a Options guru to provide more insights.

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