Buying A Put Option Explained. A put option gives the buyer the right to sell the underlying asset at the option strike price. Buying an uncovered put (or naked put) means holding off on purchasing the underlying asset until you're ready to exercise.
There is more risk involved in this strategy than with a covered put. In finance, a put or put option is a financial market derivative instrument that gives the holder (i.e. Simply put (pun intended), a put option is a contract that gives the option buyer the right — but not the obligation — to sell a particular underlying security (e.g.
Buying a put option (sometimes referred to as a long put option) is a bearish strategy that benefits from a drop in the stock price or an increase in implied volatility.buying a put option is similar to shorting shares of stock, except buying puts has limited loss potential and a lower probability of profit since the breakeven price will be lower than the current stock price. Buying a put option (sometimes referred to as a long put option) is a bearish strategy that benefits from a drop in the stock price or an increase in implied volatility.buying a put option is similar to shorting shares of stock, except buying puts has limited loss potential and a lower probability of profit since the breakeven price will be lower than the current stock price. Note that we don't specify the underlying, since the same concepts apply to all stocks in the market. Buying a put protects a floor price.
