Long Put options strategy
A long put is a bearish strategy where you buy a put option to profit from a decline in the underlying below the strike, with risk capped at the premium paid.
How the long put is built
Buy 1 put option at a chosen strike. Example: buy the 200 put for a premium of 8.
Profit and loss at expiration
The expiration payoff is calculated as: Profit = max(K − S, 0) − premium.
- Maximum profit
- Large but capped — the maximum occurs if the underlying falls to zero: strike − premium.
- Maximum loss
- Limited to the premium paid.
- Breakeven
- Strike − premium. In the example, 200 − 8 = 192.
Worked example
With a 200 strike bought for 8, at an expiration price of 180 the payoff is 200 − 180 − 8 = $12 per share, or $1,200 for one contract.
When to use it
Use a long put to express a bearish view or to hedge a long stock position (a protective put). It provides downside exposure with a known, limited cost.
Managing the risk
Like the long call, time decay erodes value if the move does not happen. Choose an expiration that gives the thesis enough time to play out.
Frequently asked questions
Is a long put the same as short selling?
Both profit from a decline, but a long put has capped, known risk (the premium), while short selling has theoretically unlimited risk.
How does a protective put work?
Holding a put against stock you own sets a floor on losses: below the strike, gains in the put offset losses in the stock.
Model this strategy
Open the free OptCurve calculator to plot the long put payoff, mark breakevens, and overlay it with other strategies.
Open the P&L calculator