Long Put - At a Glance

Strategy

• Long Put

Alternative Name

• n/a

Pre-Requisite Strategy Knowledge

• Short Stock (link to strategy)

Legs of Trade

• 1 leg
• Buy 1 XYZ put

Sentiment

• Bearish

Example

• Long 10 XYZ January 50 puts for $1.30, plus fees and commissions

Rule to Remember

• n/a

Max Potential Profit (GAIN)

• Significant, but limited

Break-Even Point

• The breakeven point occurs when XYZ stock price is trading equal to the strike price less the net premium paid.

Max Potential Risk (LOSS)

• Net Premium Paid (debit)

Ideal Outcome

• XYZ price declines significantly below the strike price less net premium paid

Margin Requirement

• No

Early Assignment Risk

• Early assignment risk applies to short options positions only.
• Long options have no risk of early assignment.

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