What is Fed Put?
Learnt a new term today called Fed Put from my daily morning thoughts by Kenny Polcari. Below is the extract of his today email.
It is the perception among investors that the FED will continue to support stocks by lowering interest rates, by manipulating monetary policy to maintain stability. Remember – A PUT – is an option contract giving the owner the right to sell some specified amount of stock at a specified price – therefore ‘protecting him’ on the downside – so in this case – when you hear people talk about the FED PUT – it is essentially the ‘protection’ offered by the FED via monetary policy decisions that protects the investor.