|
Direction |
Bearish |
|
Strategy Type |
Capital Gain |
|
Legs |
Bought put |
|
Max Reward |
Strike price x 1000 when the stock reaches $0.00 |
|
Max Risk |
Premium paid |
|
Time Horizon |
Long or short |
|
Risk Profile |
High |
|
|
|
Payoff Diagram
Description
Long puts allow the investor to profit when the share price falls however offers protection on the upside if it rises
Steps Involved
Buy put
Rational
A put can be bought when the price of a stock is expected to fall below the exerscise price of the option.