basicLow RiskBearish

Long Put

The simplest bearish options trade. You pay a premium for the right to sell shares at the strike price.

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What is a Long Put?

A long put gives you the right — but not the obligation — to sell 100 shares at the strike price before expiration. You profit when the stock falls below your breakeven (strike minus premium paid). It is the mirror image of a long call: your maximum loss is the premium you paid, and your maximum profit grows as the stock declines toward zero. Long puts are used in two main ways: as a standalone bearish bet on a stock you expect to fall, or as portfolio insurance (a protective put) hedging an existing long stock position against a large drawdown. Unlike short selling, a long put limits your risk to the premium paid while still providing meaningful downside exposure. The premium cost is your "insurance price" — if the stock never drops, you lose that cost, but if it falls sharply, your put position can multiply in value.

When to use it

Use a long put when you have a bearish thesis on a specific stock and expect a meaningful decline before expiration. Long puts are most effective when implied volatility is low — you buy the insurance cheaply before the market prices in the risk. Buying puts when IV is already elevated (after a crash or into earnings) is expensive and requires a much larger move just to break even. Long puts also serve as hedges: if you hold a large long stock position and are concerned about short-term downside, buying a put at a strike below the current price sets a floor on your losses. For speculative bearish trades, pick a strike and expiration that reflect your price target and timeline — a 30-day put is very different from a 3-month put in terms of cost and decay rate.

Structure

Buy 1 put option at your chosen strike price and expiration. One contract controls 100 shares. You pay the ask price × 100 upfront with no margin requirement. Most traders buy puts at-the-money or slightly out-of-the-money. For portfolio hedging, out-of-the-money puts (typically 5–10% below current price) are common as they cost less while still providing meaningful downside protection.

Key Metrics

Max Profit
Strike price minus premium paid, multiplied by 100 (per contract). The stock can fall to zero, so the theoretical maximum profit is (strike − premium) × 100. For example, a $50 put bought for $2.00 has a max profit of $4,800 per contract if the stock goes to zero. In practice, most traders close well before zero to capture the majority of gains without waiting for an extreme outcome.
Max Loss
Limited to the premium paid. If the stock closes above the strike price at expiration, the put expires worthless and you lose 100% of the premium. This is the full extent of your risk — no margin calls, no unlimited downside. The defined-risk nature of buying puts makes them a useful tool for traders who want bearish exposure without the unlimited risk of short selling.
Breakeven
Strike price minus the premium paid per share. For example, a $50 put bought for $2.00 requires the stock to fall below $48.00 at expiration to profit. Between $48 and $50, you recover partial premium but still take a net loss. The further the stock falls below $48, the greater the profit per contract.
Greeks Profile
Delta is negative — the put gains value as the stock falls and loses value as the stock rises. An at-the-money put has a delta of approximately −0.50, meaning it gains about $0.50 in value per $1.00 drop in the stock. Theta is negative — time decay erodes the put's value every day, which accelerates as expiration approaches. If the stock doesn't move, you lose a portion of premium daily. Vega is positive — rising implied volatility increases the put's value, which is why puts often spike in value during market sell-offs when IV explodes. Gamma is positive and highest near the strike, meaning gains accelerate as the stock moves through your strike price.

Tips & Best Practices

  • 1Buy puts with at least 30–60 days to expiration to limit the impact of accelerating time decay in the final weeks.
  • 2Consider implied volatility rank before buying — if IVR is above 50, you are overpaying and need a larger move to profit.
  • 3For hedging a stock position, buy puts at a strike 5–10% below current price — this balances cost against protection level.
  • 4A bear put spread is cheaper than a naked long put — it reduces cost by selling a further OTM put, but caps your downside gain.
  • 5Long puts on individual stocks around earnings can capture the move, but IV crush post-earnings often offsets gains — size carefully.
  • 6If the stock falls sharply in your favor, consider selling half your position to lock in profits while letting the rest run.
  • 7Do not hold a long put to expiration if most of the profit has been captured — theta decay in the last 2 weeks is most destructive.
  • 8Avoid buying very short-dated puts (under 10 DTE) as speculative bets — the speed of decay makes them lottery tickets, not trades.

See it in action

Model a Long Put with a real ticker. See the P&L chart, heatmap, and exact breakevens.

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