The set price at which you can sell the stock, regardless of its current market value.
The cost you pay to buy the option; this is also your maximum potential loss. what is buy put option
The stock stays at $100 or rises. You choose not to exercise the option, and your loss is capped at the $300 premium . The Break-Even Point The set price at which you can sell
A is a financial contract that gives the buyer the right, but not the obligation , to sell an underlying asset (like 100 shares of a stock) at a predetermined price, known as the strike price . You choose not to exercise the option, and
The stock drops to $90. You can now sell the stock at the $95 strike price. Your profit is the $5 difference ($95 - $90) minus the $3 premium paid, totaling $2 per share ($200) .
Imagine stock XYZ is trading at $100. You believe it will drop soon.
When you buy a put, you are essentially betting that the stock price will fall below the strike price before the expiration date. Example: Speculating on a Drop