Part 6 Learn Institutional Trading

Put Options Explained

A put option gives the buyer the right to sell the underlying asset at the strike price. Buyers of puts are bearish, expecting the price to fall. Sellers of puts are bullish or neutral, expecting the price to stay above the strike.

Example:
You buy an Infosys put option with a strike price of ₹1,600 for ₹40.

If Infosys drops to ₹1,500, your option is worth ₹100 (₹1,600 - ₹1,500).

Profit = ₹100 - ₹40 = ₹60 per share.

If Infosys remains above ₹1,600, your option expires worthless and you lose ₹40.

Put options are also used for hedging — protecting a stock portfolio from potential declines.