A put option allows an investor to pay a fixed premium for the right, but not the obligation, to sell an asset at a predetermined price until expiration.\u00a0 The\u00a0long\u00a0put\u00a0strategy might be useful for an investor who is bearish on either the market or the price of a specific stock.\u00a0Investors going long puts\u00a0may profit\u00a0if the price of the underlying shares falls below the combined value of the strike price and the net cost of the option.\u00a0The payoff from a\u00a0long put\u00a0position is substantial, increasing point for point with the stock\u2019s decline if the price of the underlying shares\u00a0moves lower.\u00a0 The loss potential is limited to the initial cost of the option.\u00a0 Investors face a maximum loss of the premium at any point at or above the strike price, below which point losses diminish.\u00a0 The value of a\u00a0long put\u00a0option\u00a0is hurt by the passage of time and benefits from increases in\u00a0volatility.<\/p>\n
Long Put Example:\u00a0<\/strong><\/p>\n Market Outlook – Bearish<\/p>\n Volatility View – Premium increases<\/p>\n Time Erosion – Premium decays<\/p>\n Dividends – Premium increases<\/p>\n Interest Rate – Premium decreases<\/p>\n Profit Potential – Limited<\/p>\n Loss Potential – Limited<\/p>\n Components – Buy put option<\/p>\n An investor might use a long put option position when the share price or market is expected to decline.<\/p>\n","protected":false},"author":850,"featured_media":203605,"parent":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"contributors-categories":[149],"traders-academy":[101,103,105],"class_list":{"0":"post-8676","1":"trading-lessons","2":"type-trading-lessons","3":"status-publish","4":"has-post-thumbnail","6":"contributors-categories-interactive-brokers","7":"traders-academy-intermediate-trading","8":"traders-academy-level","9":"traders-academy-trading-lesson"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"\n\n
\n\n
\n Underlying Stock<\/td>\n \u00a0$\u00a0\u00a0 36.25<\/td>\n <\/td>\n <\/td>\n Underlying Stock<\/td>\n Profit & Loss<\/td>\n<\/tr>\n \n Long Put Strike<\/td>\n \u00a0$\u00a0\u00a0 35.00<\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 10<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2,300.00<\/td>\n<\/tr>\n \n Premium<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0 2.00<\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 20<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,300.00<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 25<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 800.00<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 30<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300.00<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 35<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 40<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 45<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 50<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 55<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 60<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 70<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n \n <\/td>\n <\/td>\n <\/td>\n <\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 80<\/td>\n \u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200.00)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"