Put option buying strategy. Long Put Explained | Online Option Trading Guide
Long Put Option Strategy (Best Guide w/ Examples)
Note: While we have covered the use of this strategy with reference to stock options, the long put is equally applicable using ETF options, index options as well as options on futures. However, for active traders, commissions can eat up a sizable portion of their profits in the long run.
If you trade options actively, it is wise to look for a low commissions broker. Traders who trade large number of contracts in each trade should check out OptionsHouse.
Similar Strategies The following strategies are similar to the long put in that they are also bearish strategies that have unlimited profit potential and limited risk. Put Backspread Protective Call Out-of-the-money Puts Going long on out-of-the-money puts maybe cheaper but the put options have higher risk of expiring worthless.
In-the-money Puts In-the-money puts are more expensive than out-of-the-money puts but the amount paid for the time value of the option is also lower.
Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results