Xenobert, a valid point in relation to the original comic, but as it was posted ON the internet AND all the posts have been within the past two years, I think you've missed my point. I wasn't referring to the original comic and how it was read in 1994 and neither were any of the posters!
But thanks for using a misunderstanding to assume that I wasn't 25 in 1994 - and that I would be working in the USA (when I'm Australian).
@religiousnut Considering the very limited access to looking up information like this in '94, with no wikipedia and few stock investment websites, I'm going to have to say "Scott expects his readers to not be lazy and display the intelligence to look it up." is a fairly uninformed comment, made by someone who did not likely hold a job in '94 (still in grade school perhaps). However, had you held a job, especially in a corporation with a 401k, the knowledge of puts was fairly common, and often jested about in conversations about where your company was going, or not going.
@barrycarter While buying a put option is similar to short selling they are not the same. The advantage of buying a put over short selling the asset is that the option owner's risk of loss is limited to the premium paid for it, whereas the asset short seller's risk of loss is unlimited. For example a short seller borrows 500 shares at $10 a share, then immediately sells those shares for $10 a share. The investor must then return 500 shares to the share lender, so if the price per share drops to $5, he buys 500 shares at that price and gives them back, thus making $2,500.
A put is more like buying insurance on your stock price, you pay a broker more than it's worth per share (say 100 shares at $10 per share $2 premium) and if the price drops to say $5 while the broker is still under contract, you can buy another 100 shares at the new price and sell them to the broker at the contracted put price of $10 per share.
In both cases you lose money if the stock price goes up, but with a put you only lose the premium you paid.
Yup. Basically, if you recommend buying put options it means that you expect the underlier's price to fall. So by giving this recommendation Dogberts says he expects the company's stock value to fall - and since Dogbert is flawless you can expect that to happen ;)