Strategy lesson · Basic · bearish
Long Put Explained
A long put profits when the underlying falls. Defined risk makes it a common hedge or bearish speculation tool.
How a Long Put is built
Buy one put option at your chosen strike and expiration.
- Leg 1: buy put · strike template 95 · premium ~2.5 · 1 contract(s)
Risk & reward snapshot
| Market bias | bearish |
|---|---|
| Max profit | Large — approaches (strike − premium) × 100 if the stock goes to zero. |
| Max loss | Limited to the premium paid. |
| Breakeven | Strike − premium paid (at expiration). |
Figures are conceptual for the classic structure. Your actual premiums, strikes, and fees change the numbers — confirm on the calculator.
When traders use it
- You are bearish on the stock or index.
- You want portfolio insurance (protective put) while holding shares.
- You want downside exposure without shorting stock.
Key risks
- Premium decays if the selloff is late or too small.
- Strong rallies or IV collapse can erase put value quickly.
Practical tips
- As a hedge, size puts against the dollar value of shares you protect.
- Compare put debit spreads if you want cheaper defined-risk bearish exposure.
Practice on the calculator
- Open the Long Put calculator.
- Load a symbol and option chain; fill realistic mid premiums.
- Review max profit, max loss, breakevens, and the date × price heatmap.
- Change strikes and DTE to see how risk shape shifts.
FAQ
What is a Long Put?
A long put profits when the underlying falls. Defined risk makes it a common hedge or bearish speculation tool.
What is the max loss on a Long Put?
Limited to the premium paid.
When should I use a Long Put?
You are bearish on the stock or index. You want portfolio insurance (protective put) while holding shares. You want downside exposure without shorting stock.