Long Put

The simplest bearish bet — buy a put for leveraged downside, or as insurance, with loss capped at the premium.

A long put is the mirror image of a long call: it profits when the underlying falls, with risk limited to the premium.

Market outlook

Bearish — you expect a move down before expiration.

Construction

• Buy 1 put at strike $K$ for premium $P$.

Risk / reward

• Max loss: $P$, if the stock closes at or above $K$.
• Max profit: large but capped (the stock can only fall to $0): $K - P$ per share.
• Breakeven at expiration: $\text{BE} = K - P$

When to use it

• A bearish catalyst (weak guidance, breakdown) with a defined timeframe.
• As a cheaper, defined-risk alternative to short selling.

Risks & management

• Same enemies as the long call: theta decay and IV crush.
• Puts often carry higher IV than calls (skew), so they can be relatively expensive.

Example

Stock at $50. Buy the $48 put for $1.50. Breakeven $46.50. At $42 the put is worth at least $6 (+$4.50); above $48 at expiry you lose the $1.50.