Long Put
Buy a put option to profit from a decline in the underlying stock. This is the simplest bearish strategy with large profit potential and limited downside risk.
Payoff Diagram
How to Set Up This Trade
Buy one put option at a chosen strike price and expiration date.
Trade Setup — 1 Leg
When to Use This Strategy
You expect a significant decline in the stock before expiration. Best when implied volatility is low so the option is cheaper to purchase.
Tips from the Pros
- 1
Long puts can also serve as portfolio insurance (protective puts) on stock you own.
- 2
Avoid very short-dated puts unless you expect an imminent move — time decay is punishing.
- 3
Consider a bear put spread if the premium is too expensive, to lower your cost.
Quick Reference
Max Profit
Strike price minus premium paid (maximum if the stock drops to zero).
Max Loss
Limited to the premium paid for the put option.
Breakeven
Strike price - premium paid.
Best IV Environment
Low IV
Time Decay (Theta)
Hurts (negative theta)
Risk Level
Medium RiskLearn More
Our courses cover this strategy with real trade examples and live market analysis.
Browse CoursesRelated Bearish Strategies
Other strategies for a bearish market outlook.
Bear Put Spread
A debit spread that profits from a moderate decline in the stock price. You buy a higher-strike put and sell a lower-strike put to reduce cost. Risk and reward are both capped.
Bear Call Spread
A credit spread that profits when the stock stays below the short call strike. You sell a lower-strike call and buy a higher-strike call for protection, collecting a net credit.