Long Put Strategy

BearishBeginnerLimited Risk

The most basic bearish options strategy - buy a put option and profit from downward price movement.

Long Put Calculator

Position Metrics

$141.50
Breakeven
$3.50
Max Loss
$-3.50
Current P&L
0.0
Delta (%)

Long Put Profit/Loss Diagram

Current: $150Breakeven: $141.50$75$94$113$131$150$169$188$206$225$-4$9$22$35$47$60$73Stock Price at Expiration ($)Profit/Loss ($)
P&L Curve
Current Price
Breakeven

Strategy Overview

Type:Single Leg
Outlook:Bearish
Risk/Reward:Limited Risk, High Reward
Complexity:Beginner

Description

A Long Put is a basic bearish options strategy where you buy a put option, betting that the stock price will fall below the strike price before expiration.

Setup

Buy Put Option
Strikes: At-the-money or out-of-the-money
Expiration: 30-60 days typically

When to Use

  • •You expect the stock to decline significantly
  • •You want downside protection without shorting stock
  • •You want to leverage your capital for bearish exposure
  • •You prefer defined maximum loss

Advantages

  • +Limited risk (premium paid)
  • +High profit potential if stock falls
  • +No need to short stock or borrow shares
  • +Leverage amplifies gains on downside

Disadvantages

  • -Time decay works against you
  • -Can lose 100% of premium
  • -Requires directional accuracy
  • -Affected by volatility changes

The Greeks

Delta
0.0%
Moderate sensitivity to price moves
Price sensitivity - how much the option price changes per $1 stock move
Gamma
0.0316
Low acceleration risk/reward
Delta sensitivity - how much delta changes per $1 stock move
Theta
$0.00
Low time decay
Time decay - how much value lost per day
Vega
$0.00
Low volatility sensitivity
Volatility sensitivity - price change per 1% volatility change
Rho
$0.00
Low rate sensitivity
Interest rate sensitivity - price change per 1% rate change

Greeks Summary

• Delta: This position gains $0.00 per $1 stock increase

• Theta: Loses $0.00 in value daily due to time decay

• Vega: Gains $0.00 per 1% increase in implied volatility

Risk Analysis

Overall Risk LevelMedium
Based on time to expiration, volatility, and moneyness
Max Loss
$3.50
(2.3% of stock price)
Breakeven Point
$141.50
-5.7% from current
Time Decay RiskMedium
Volatility RiskLow
Distance from Money3.3%

Scenario Outcomes

Bear Case
Stock falls 20%: $120.00
$21.50
Base Case
Stock unchanged: $150.00
$-3.50
Bull Case
Stock rises 10%: $165.00
$-3.50

Risk Reminders

  • • Options can expire worthless, losing 100% of premium paid
  • • Time decay accelerates as expiration approaches
  • • Requires stock to move above breakeven to be profitable
  • • Early assignment not a concern for long calls

How It Works

1

Buy a Put: Purchase a put option at your chosen strike price and expiration date.

2

Pay Premium: The cost of the option is your maximum risk.

3

Profit on Decline: Make money when the stock falls below your breakeven point.

Key Metrics

Max Profit:Strike - Premium (if stock goes to $0)
Max Loss:Premium Paid
Breakeven:Strike - Premium
Best Case:Stock falls significantly
Worst Case:Stock above strike at expiration