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Long Put

Analyzing the risk profile of a long put strategy

Variation In Quantity

The image below shows how a long put risk profile changes when buying multiple contracts. A single put is shown as a solid gray line for comparison. In this profile, we are buying two puts instead of one. Our break even has not changed but our risk and profit potential doubles. If we were buying three contracts, our b/e would remain the same, and both our max loss and P/L rate would triple. This pattern would continue for as many contracts as we decided to buy.
Figure 4

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