They say a crash is coming, are you ready?

To protect my house, I buy insurance. To protect my car, I buy insurance. Wouldn’t it be nice to have insurance for stocks! Well, there is. Let me explain.

I would first have to decide how long I wanted the to cover the stock gains with the PUT option. The Put option would sell the stock automatically upon expiration if the share price was below the price of the option. Below are examples of put options that expire in 7, 60, 90 and 145 days periods.

They put works like this, if the stock price goes below the $35 the strike price on or before the expiration date, I would have the right to sell that stock for $35 even if the price is much lower. I do not have the obligation to sell it before expiration I just have the right to sell it so I can wait and see if the price recovers and moves back up before I execute the sale so this allows me to keep the stock and watch it knowing that if it stays below $45 that I have already sold it for $45.

If MU stock was now trading at $55 and I wanted insurance that it wouldn’t fall below say $45.

I would buy a put option that would expired some time in the future. For example, if I bought a Put option with a $45 strike that expires in 45 days it would cost me .45 cents per share