← BeginnerLesson 20 · 6:32
Long put (strategy)
Summary
You can set up a long put step by step and say your best case and worst case before you pay. You can compare expiries and strikes, and explain why a put's profit has a ceiling because a stock can't fall below zero. You know an in-the-money put left to the last day is generally exercised for you, which sells 100 shares you may not own.
Key terms
- long put
- A put you bought and hold, used when you expect a stock to fall soon and want a fixed maximum loss.
- capped profit
- choosing a strike
- exit plan
Check yourself
Answer each question to see why the right answer is right.
1. What is the most you can make with the 30-day put with a strike of $100, bought for $341?
2. XYZ ends at $94. How do the put with a strike of $100 ($341) and the put with a strike of $95 ($141) compare?
3. XYZ ends at $98. What is your result on the $100 put bought for $341?
4. Your put finishes in the money on the last day and you've done nothing. What generally happens?
5. XYZ sits at $100 and 15 days are left. Where is your $341 put?
Finished the video and the quiz? .