Introduction 1 of 4
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The speculative purchase of equity put options is the simplest way for investors to employ option contracts to profit from a decline in value of the underlying stock. Though relatively straightforward with respect to their use, put options are one of the building blocks of many more sophisticated option strategies and so should be thoroughly understood by all option investors.
This class will address this particular use of the long put - i.e., as a speculative, bearish strategy.
Although an equity put may be exercised by its owner at any time up until the last trading day for the contract, and underlying shares sold, speculative put purchasers generally expect to sell them for a realized profit at some point before they expire.
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