The Long Put: What is it and how is it used | OptionsANIMAL
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The Long Put: What is it and how is it used

In the trading world, when you buy a put, it is called a long put.  When you buy a put you are paying for the right to sell 100 shares of the equity per contract anytime you would like before it expires.  The price you sell your shares for is the strike of the put you purchased and is also called the exercise price.   The contract is a fiscal agreement between the buyer and the seller of the put for as long as you have the contract open.  You do not have to own shares to buy a put.  You do not have to have enough money to buy shares to buy a put.  The total risk in buying a put is the price that you pay for it so that is all the money you need to buy a put.

People buy puts for many reasons.  A put can be purchased to protect a stock position.  Puts on an index can be purchased to protect a portfolio from a drop in the broad market.  They can be purchased as a standalone trade or as part of a spread.  The phrase “Sell in May and go away” turns in to “buy puts in May and make some hay” as long as the equity drops fast enough.
To profit from a long put you do not have to exercise it.  If you expect an equity’s price to drop, you can buy a put and sell it for more than you paid for it once the equity drops.  Your total investment is the original cost of the put.

Long puts have time value that decays as time passes. The longer the time period purchased the higher the initial cost.  The longer a put is held, the more time value is lost.  To make money with a put, the equity’s price must drop faster than the put’s time value decays.  If you exercise a put you forfeit any time value that is left so it is often more profitable to sell the put and sell the stock rather than exercise a put to sell a stock position.  It is a little more complicated than that.  Factors like how far in-the-money the put is, changes in implied volatility, the bid/ask spread and how long until expiration also impact a put’s value.

SPY Long Put Risk Profile

On the profit/loss chart above, the thin line is the profit/loss for a given price of the SPY today for a long put at strike 140.  The thicker line is the profit/loss for a given price at that options expiration.  The difference between the two lines is the time decay.

The long put can be a very profitable part of a good trading plan.   Most people know how to make money in a bullish market but few know how to make money in a bearish market.  The long put is one way to do it.

Ken Bailey
OptionsANIMAL Instructor

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I am sold for life. Keep up the great work everyone.
Thank you,
Steven Hollosi
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This was my first Summit experience and I thought attending was very worthwhile. The programs and materials were helpful and the open session Q&A following the presentations was great. I left with six other OA members contact information to really get into the “community” feeling!
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23:23 08 Nov 18
We have been with Option animal for 7 years plus. They have delivered on all levels. If you want to learn to trade options there is no better education. Make sure you finish all you levels before you start live trading if you don’t your education will cost you more as I learned the hard way . One other point make sure you try to attend as many conference that Option animal puts on you will not be disappointed .Your trading skills will get sharper and most of all you will meet a bunch of great traders
Jeffrey Nee
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14:29 30 Sep 18
Excellent teachers dealing with a complex subject to a room full full of varying skill levels. They succeeded.
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Ken Carley
10:59 06 May 19
Been a member for almost 9 years. Always learn something new when I attend their many free summits around the US. The instructors are great and very available to the students. Absolutely the best Options Education anywhere.
Blaine Jones
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Options Animal is one of the best, if not the best, educational experience I have ever had. If there were more than 5 stars I would rate them a 10.
Edith Falls
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00:24 15 Nov 18
It is legit with certified courses and tax incentives.
s hart
s hart
21:26 04 May 19
The knowledge I've gained from being involved with Options Animal since 2013 has been extremely refreshing & tremendously helpful. I don't have to fret about what's going to happen with any trades I have going, because I already know what can happen in any type of market movement and thus, can prepare accordingly. If you have intentions of becoming a trader yourself, whether you're a rookie or have played with the stock market for years, this is the place you want to be to get you aimed in the right direction. The instructors are amazing - very knowledgeable & deeply caring. The membership community is wonderful. Getting with these people personally at the Summits is a great thing. You most-likely will end up with some wonderful friendships with fellow traders (and instructors) in the community. The things you can do with this education are limited only by you. Scott Hartman - OA Graduate
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16:00 04 Sep 20
Best Stock and Options education in the industry. This program will change your life! From our Customer Service to our coaches, we truly care for your success as an individual. I have worked with this team for over a decade and the adjustments we teach will allow you to cash flow while protecting once the market turns on you.

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21:22 19 Dec 19
If you a new or an experienced options trader this is very much desired service where you can learn a lot and get help when you need it most from live coaches at Options Animal.Keep up guys with great work!S. G.
Dana Podliska
Dana Podliska
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Victoria L Roberts
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22:35 02 Mar 20
They offer a systematic approach to options education. Each instructor has taken the courses. They are all intelligent, articulate and available to answer questions. No sales gimmicks just a commitment to the students. I highly recommend them.
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17:35 22 Dec 18
Great service for learning the correct way to trade options.
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