I don’t understand options well and would like to make some small options trades to drive my learning, but from what I see on my broker (Fidelity), all puts for something like $SPX cost several thousand at minimum.
I feel that I should also point out that long options are a risky play. They do eventually expire, and may expire worthless. You have to get the timing right as well as the direction, and deflating volatility could mean they lose most of their value sooner than you expect. You could lose your entire investment. If you want to experiment, either do a “paper” trade (simulate and track it, but don’t actually do it), or make sure it’s money you can afford to lose on a very small percentage of your account. 5% of the account is considered big for a single trade, even for experienced option traders who know what they are doing, and I basically never go that high on a long position. I’d recommend you keep it to 1% or less.
You can try puts on SPY instead. It’s an ETF that tracks the same index: the S&P 500, but the share price is 1/10th, so the options are proportionally cheaper as well. There’s also the XSP mini options, but I think SPY still has better liquidity.
Also, if you have the right kind of account, you can try spreads, buying one option and selling another to help pay for it.
You could also consider a call option on an inverse index ETF, like SH, which is designed to rise when SPX falls. Its share price is even lower than SPY, currently about 1/100th of SPX or under $30/share. Most options on this will cost hundreds or less per contract, not thousands.
Do you know of a way to buy puts with <$1000?
I don’t understand options well and would like to make some small options trades to drive my learning, but from what I see on my broker (Fidelity), all puts for something like $SPX cost several thousand at minimum.
I feel that I should also point out that long options are a risky play. They do eventually expire, and may expire worthless. You have to get the timing right as well as the direction, and deflating volatility could mean they lose most of their value sooner than you expect. You could lose your entire investment. If you want to experiment, either do a “paper” trade (simulate and track it, but don’t actually do it), or make sure it’s money you can afford to lose on a very small percentage of your account. 5% of the account is considered big for a single trade, even for experienced option traders who know what they are doing, and I basically never go that high on a long position. I’d recommend you keep it to 1% or less.
You can try puts on
SPYinstead. It’s an ETF that tracks the same index: the S&P 500, but the share price is 1/10th, so the options are proportionally cheaper as well. There’s also theXSPmini options, but I thinkSPYstill has better liquidity.Also, if you have the right kind of account, you can try spreads, buying one option and selling another to help pay for it.
You could also consider a call option on an inverse index ETF, like
SH, which is designed to rise whenSPXfalls. Its share price is even lower thanSPY, currently about 1/100th ofSPXor under $30/share. Most options on this will cost hundreds or less per contract, not thousands.Thank you – super helpful.