What is a long put?


Video Transcription

Hi again, Casey Jensen here at OptionsANIMAL. Let me give you a quick overview of a long put. What is a long put? All right everyone, when anything is long, we're buying it, so in this case, we're buying a put option. Well, how does that work in the stock market if we buy a put option? Let me give you an example. If we buy a September put option that has 45 days to expire, LP just being long put for short, at strike price 100, what you're doing is let's say the stock's trading at 100. Well, this will give you the absolute right to sell your stock at 100. How's that apply to a trader? Well, what if the stock drops to 80? What if it gaps down? Well, you don't have to be left frustrated that the market gapped you. In fact, the news'll be on less I think, because you know you have the right to sell your stock at 100. Think about how that might change the way you approach the stock market.