Strategy reference
Long Put
A long put is the simplest bearish or hedging options position: you pay a premium up front for the right to sell a stock at a fixed strike price before the option expires.
Structure
You buy one put option contract. Each standard contract represents 100 shares of the underlying stock. Your only cost is the premium you pay; you have no further obligation.
Payoff at expiration
At expiration, you profit dollar-for-dollar once the stock finishes below the strike by more than the premium you paid. Your maximum loss is the premium itself, which happens any time the stock finishes at or above the strike. Maximum gain is the strike minus the premium (achieved if the stock falls to zero).
- Stock price
- $100
- Buy
- 1 × $100 put @ $3.50
- Net cost (debit)
- $3.50
- Max gain
- $96.50 (if stock goes to $0)
- Max loss
- $3.50 (the premium) at S ≥ $100
- Breakeven
- $96.50
Frequently asked questions
What is a long put option?
A long put gives you the right — but not the obligation — to sell a stock at a fixed strike price before expiration. You profit if the stock falls below the strike by more than the premium paid.
What is the maximum loss on a long put?
The maximum loss on a long put is the premium paid. It occurs at any expiration price at or above the strike.
What is the maximum gain on a long put?
The maximum gain on a long put equals the strike price minus the premium paid, achieved if the stock falls to zero.
This page is an educational reference, not investment advice. Numbers in the worked example are approximations for illustration only — real option prices depend on volatility, interest rates, dividends, and time to expiration. See the full disclaimer for details.