Long Put strategy denotes an option strategy wherein in order to speculate on the down fall in the price of the underlying security, the buyer buys a put option. The underlying can be equity or an index. In case of long put trade, in the hope that the price of underlying security falls, you purchase a put option and hold for long in your portfolio. Thus the value of the option increases.
Such an option can be sold either during the expiry date or before that depending upon the profit that you are willing to register.
Long put strategy provides alternative options to the investor who is other wise involved in simple short selling of securities and then buying it a price lower than what he sold it at, thus registering profits. Options offer higher amount of liquidity, leverage and roofed amount of loss (ceiling to maximum loss that you can have) and thus are favorable as compared to short selling.
Tags: Long Put, options strategy, short selling of securities
Related posts:
