Bearish · Beginner
Long Put
Strategy
The simplest bearish trade: buy a put, risk only the premium, and profit if the underlying falls — or use it as insurance on a holding. Here's exactly how it works.
What it is
A long put means buying a single put option — the right to sell the underlying at the strike until expiry. It's the most direct way to express a bearish view with strictly limited risk, and it doubles as insurance for a long position.
Key facts
- Market view: bearish (expect a decent fall).
- Construction: Buy 1 put (ATM or slightly OTM).
- Net cost: debit — you pay the premium.
- Max profit: strike − premium (large, capped only because price can't go below zero).
- Max loss: limited to the premium paid.
- Breakeven: strike price − premium paid.
Long put payoff at expiry — loss capped at the premium; profit rises as the underlying falls below the strike.
Worked NIFTY example
NIFTY at 22,500; buy the 22,500 put for 140 (illustrative):
- Breakeven: 22,500 − 140 = 22,360.
- If NIFTY expires at 22,100 → put worth 400 → profit = 400 − 140 = 260.
- If NIFTY expires at or above 22,500 → put expires worthless → loss = 140, and no more.
When to use it
- You have a directional bearish view with a catalyst or timeframe.
- You want defined risk instead of shorting futures.
- As a hedge/insurance against a long holding (see also protective put).
Risks to respect
- Time decay (theta) erodes value each day if price doesn't fall.
- IV crush can shrink the premium even if price holds.
- The fall must clear the breakeven to profit.
Model the long put live
See the payoff, breakeven and Greeks on TradePulse's strategy builder.
Related strategies
- Long Call — the bullish counterpart.
- Bear Put Spread — cheaper, capped bearish play.
- Bear Call Spread — bearish credit spread.