When you buy a put, you are essentially betting that the stock price will fall below the strike price before the expiration date. Example: Speculating on a Drop
The stock drops to $90. You can now sell the stock at the $95 strike price. Your profit is the $5 difference ($95 - $90) minus the $3 premium paid, totaling $2 per share ($200) . what is buy put option
This right is valid only until the contract's . To acquire this right, the buyer pays an upfront fee called a premium . Key Terminology When you buy a put, you are essentially
The stock stays at $100 or rises. You choose not to exercise the option, and your loss is capped at the $300 premium . The Break-Even Point Your profit is the $5 difference ($95 -
Buying a put option is a powerful bearish strategy used by investors to profit from a stock's decline or to "insure" their existing portfolio. Unlike buying a stock where you want the price to go up, buying a put option increases in value as the underlying asset’s price drops. What is a Put Option?