# Please explain this statement regarding how Greenspan got the name "Greenspan put"

**URL:** <https://boards.straightdope.com/t/please-explain-this-statement-regarding-how-greenspan-got-the-name-greenspan-put/677471>\
**Category:** Factual Questions\
**Created:** [December 30, 2013, 12:04pm UTC](https://boards.straightdope.com/t/please-explain-this-statement-regarding-how-greenspan-got-the-name-greenspan-put/677471 "2013-12-30T12:04:25Z")\
**Posts on this page:** 3\
**Page:** 1

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**Author:** ![davidmich](https://avatars.discourse-cdn.com/v4/letter/d/e56c9b/32.png) [@davidmich](https://boards.straightdope.com/u/davidmich)\
**Post date:** [December 30, 2013, 12:04pm UTC](https://boards.straightdope.com/t/please-explain-this-statement-regarding-how-greenspan-got-the-name-greenspan-put/677471/1 "2013-12-30T12:04:25Z")

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I understand the difference between a “call” and “put” , a log position and short position. What I don’t understand is how its used below:

“they could enter long positions and sell them at a higher price on or before a certain date, creating a put option in practice”.

I’m sure I’m missing the logic in the passage. How can you create a put option from a long position. Is he referring to a long call position?

I look forward to your feedback  
davidmich

In full:

“Greenspan and the Fed kept interest rates rather low to encourage growth in the stock markets. Investors assumed from this policy that stocks would continue to rise and, thus, they could enter long positions and sell them at a higher price on or before a certain date, creating a put option in practice, if not in contract. While this was likely not the intent of the Federal Reserve at this time, investors used this investment strategy anyway.”

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**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\
**Post date:** [December 30, 2013, 9:32pm UTC](https://boards.straightdope.com/t/please-explain-this-statement-regarding-how-greenspan-got-the-name-greenspan-put/677471/2 "2013-12-30T21:32:15Z")

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The term “put option” in the context of Greenspan’s nickname is meant only metaphorically, not literally. The idea is that Greenspan’s expansive monetary policy effectively eliminated the risk in long positions: You could enter a long position and be assured that prices would rise, so you were effectively insured against losses from your long position the way a put option insures you. You were, in a sense, given a free put option to hedge you against potential losses.

That was at least the perception which gave Greenspan his nickname. Whether this perception was right is a totally different matter.

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**Author:** ![davidmich](https://avatars.discourse-cdn.com/v4/letter/d/e56c9b/32.png) [@davidmich](https://boards.straightdope.com/u/davidmich)\
**Post date:** [December 31, 2013, 3:08am UTC](https://boards.straightdope.com/t/please-explain-this-statement-regarding-how-greenspan-got-the-name-greenspan-put/677471/3 "2013-12-31T03:08:42Z")

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Thanks Schnitte. Very helpful  
davidmich