Hey /biz/, I don't do stocks but I was having a conversation with a friend after work and wanted to clear something up.
If you buy an option on lets say toilet paper, and the price of toilet paper goes up how do you use your option?
Do you buy toilet paper at the lower price and resell it? How does it work after you won the bet?
>>1414796
The option allows you to buy it at a set price.
So if the actual price rises, you profit, because by exercising the option, you buy at the set price and immediately sell at the (now higher) actual price.
>>1414871
>you buy at the set price and immediately sell at the (now higher) actual price.
Ok but how. Lets say I now own 2 million rolls of toilet paper that I bought below market price. Who buys them? A competing toilet paper company?
bamp
>>1414877
You buy options on the stock, not the product itself.
There will be plenty of people willing to buy the shares, regardless of price.
>>1414877
presumably, in this hypothetical physical toilet paper options market, you would sell them to some kind of toilet paper retailer who will make money off them by selling them to consumers
>>1414877
you could sell the option to buy toilet paper at the lower price. or you could exercise the option, buy the toilet paper, then sell it.
people will buy your option though.
>>1415218
>>1415227
Thanks
>>1415237
>people will buy your option though.
Where could a person buy said options?
>>1414877
What you're talking about is deliverable futures.
Not options.
You can have an option on a deliverable future however.
>>1415266
idk bro whatever trading service you use. these would be called in-the-money options so just look for them on your brokerage website.