What Happens When You Buy A Put Option 🎉

Typically, one standard equity put contract represents 100 shares of the underlying stock.

You pay a premium to the seller to acquire this right. what happens when you buy a put option

Buying a put option gives you the right, but not the legal obligation, to sell an underlying asset at a predetermined "strike price" until a specific "expiration date". This is fundamentally a position; you profit when the underlying asset's price falls. Core Mechanics of a Long Put When you purchase a put, you are "long" the option. Typically, one standard equity put contract represents 100

Put options: What they are, how they work and how to buy and sell them This is fundamentally a position; you profit when

What happens at expiration depends on the stock price relative to your strike price:

Your maximum potential loss is strictly limited to the premium paid . Unlike short selling, you cannot lose more than your initial investment. Outcomes at Expiration