Long Put Calculator

A long put is the right to sell one hundred shares at the strike price until expiry. It is the cleanest bearish position with a known worst case: the premium paid is all that can be lost, and the gain grows as the stock falls, all the way to a stock price of zero. The premium is also the hurdle, since the stock has to drop below the strike by more than that premium before the trade is ahead at expiry.

When it is used

Traders buy puts to profit from an expected decline, and investors buy them as insurance on shares they already own, which the Married Put page covers. Puts are often more expensive than calls the same distance from the price, because demand for downside protection keeps their implied volatility higher. That makes timing matter: buying after a sharp fall, when fear is already priced in, can be expensive even when the view is right.

How it makes and loses money

Before expiry the put gains when the stock falls and when implied volatility rises, and loses a little every day to time. A fast drop usually comes with a volatility spike, so the put can gain more than its intrinsic value alone suggests. A slow grind lower can disappoint, because time decay offsets the drift.

What to check in the grid

Trace the row at the current price to see the cost of being early. Then compare the breakeven at expiry with the earlier columns: a put is often profitable a few weeks in at prices where it would lose at expiry, which is the case for closing early rather than holding.