Long Put
You buy (long) a Put
Positions in Chart: 1 lot of 25500 PE. Spot price: 25800
Setup
Buy ATM Put option
When to Use
- Speculate on a large, volatile price decrease
Market Outlook
Risk & Reward
Strategy Details
Description
A trader who wants to speculate on a large, fast, and volatile price decrease can buy a Put. The trader pays a debit, called a premium, to buy the Put and has the right (but not the obligation) to sell 100 shares at the strike price. Suppose NIFTY is trading at ₹25,800. You forecast a large, fast decrease in NIFTY price and you also forecast an increase in NIFTY volatility. You buy a ₹25,500 Put for ₹45 to express this view. Your breakeven NIFTY price at expiry is ₹25,500 (strike price) - ₹45 (premium paid) = ₹25,455
Example
If NIFTY is at ₹25,800, set up: Buy ATM Put option.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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