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Long Put

Analyzing the risk profile of a long put strategy

What Happens At Expiration?

If The Put Expires ITM

If the share price is less than your put strike at expiration, it means your put is
and you will have the right (not the obligation) to sell 100 shares at the strike price. Of course, you don't have to wait until expiration to
your option unless it is a
or
If you do, the option should be automatically exercised if it expires with
(double check with your brokerage). If the share price has fallen lower than your strike plus the debit you paid for the put, it will result in a net profit. If it has not fallen below that point, it will be a net loss.
Figure 5 Figure 6

If The Put Expires OTM

If the share price is above than your put strike at expiration, it means the put is
and worthless. The position is a loser, but the most you can lose is the amount you paid for it.
Figure 7

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