Long Put Option Strategy

A long put option strategy is the purchase of a single put option contract. This contract gives you the right to sell shares of a stock at a specified strike price before a designated expiration date. Investors buy put options when they expect the underlying stock price to decline significantly. It provides a way to profit from a falling stock market without having to short sell shares directly.

The maximum profit for a long put is substantial because the stock price can fall all the way down to zero. The maximum loss is limited strictly to the upfront premium paid to acquire the option contract. If the stock price rises or stays above the strike price, the option expires worthless, and you lose only the money you spent to buy it.