Another Put Option question.....?

(assuming I bought--NOT SOLD--such an option)....as the price of the stock decreases, the gain (on my end) theoretically is unlimited.

Is it unlimited so long as the value is greater than 0?

How would it work if say the value of the stock ($15.00 April 2009, say $1 per contract) if that stock fell to .29 a share (say due to bankruptcy?)

El Guapo, can you explain time value (on an option)?

is it the same as time value of money (interest wise?)

You don't have unlimited gain potential on a long put as you rightly point out, since the stock price can't drop below 0.

In your example the option goes in the money once the stock drops below 15, and however far it falls from there becomes the intrinsic value of the put, up to $14.71 plus any remaining time value if the stock fell to .29 a share. Hope that helps.

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