The Long Put Strategy is the one of the most basic options strategies. If the trader is bearish on a stock they can purchase an options contract (Put) giving them the right to sell 100 shares of stock on a specific date (expiration) and price (strike). The cost of the contract is multiplied by 100 creating a Debit in the trading account. This strategy can be advantageous over selling the stock outright as the risk is limited to the value of the Put.
As the stock price declines the value of the Put will increase. If the stock increases in price the value of the option will decrease with the maximum loss being the value initially paid for the Put.
