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Long Put

Bearish Strategy

Use Zuviz's free options visualizer to build this strategy instantly. Buy a put to profit from downward price movement with limited risk. The mirror image of a long call.

⚡ Key Takeaways

  • Market Outlook: Strongly bearish (expect significant downward move)
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  • Max Profit: Strike - premium (stock can go to $0)
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  • Max Loss: Premium paid ($3.00 in example = $300/contract)
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  • Breakeven: Strike - premium (e.g.,

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Market Outlook
Bearish
Max Profit
Strike - Premium (if stock goes to $0)
Max Loss
Premium Paid
Breakeven
Strike - Premium

📊 Payoff Diagram

Open in Zuviz →

🏗️ Strategy Structure

Leg Action Type Strike Premium
1 Buy Put $95 $3.00

Cost: $3.00/share = $300/contract

🧮 Key Calculations

🎯 When to Use This Strategy

  • Strongly bearish: You expect the stock to drop significantly
  • Portfolio hedge: Protect long stock positions
  • Before negative earnings: Anticipating a miss
  • Alternative to shorting: Limited risk vs. unlimited risk of short selling

📈 Greeks Impact

Delta (Δ)

Negative - You want the stock to fall.

Theta (Θ)

Positive for short strategies (time helps), negative for long strategies.

⚖️ Pros & Cons

Pros

  • Unlimited downside profit potential
  • Defined risk (premium)
  • Portfolio insurance

Cons

  • Time decay hurts
  • IV crush risk
  • Stock must drop significantly

📝 Real-World Example

Stock: TSLA at $200. Trade: Buy $190 Put for $5.00.

Cost: $500. Max Profit: $18,500. Max Loss: $500. Breakeven: $185.

🔗 Related Strategies

📊 Bear Put Spread

Lower cost bearish play (capped profit)

🛡️ Protective Put

Hedge stock you own from downside

Visualize This Strategy

See the payoff diagram in Zuviz.

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