Just to drive home my point: Here's the pricing for a put option on AAPL to sell the stock at $450. Expiration 16-Jan-2015 (roughly one year from now): 40.11

Just to drive home my point: Here's the pricing for a put option on AAPL to sell the stock at $450. Expiration 16-Jan-2015 (roughly one year from now): 40.11 Down 3.09(7.15%) Jan 27 http://finance.yahoo.com/q?s=AAPL160115P00450000 http://finance.yahoo.com/q?s=AAPL160115P00450000 That price is per share. So, for roughly $4011, you can buy the right to SELL 100 shares of AAPL between now and Jan-2015 for about one hundred dollars per share LESS than what it's closing price was yesterday. Figuring in the premium, that's about $140 loss per share built into that trade yet there are 1300 OPEN contracts for just that. By your thinking, those puts should be worthless, right? Moreover, there are already ~1300 OTHER put contracts out there at this exact same strike/expiration. What was the volume yesterday in those contracts? 15. Fifteen fucking contracts. Hey...what about at $550 strike? 12 contracts. Liquidity and premium are important. A lot of the time liquidity is the MOST important thing. It doesn't matter what price someone else got if you can't get that price because there isn't a counter-party to trade with. You can't buy what someone else isn't willing to sell and you can't sell what someone ain't buying.