The stock stays at $100 or rises. You choose not to exercise the option, and your loss is capped at the $300 premium . The Break-Even Point
The stock drops to $90. You can now sell the stock at the $95 strike price. Your profit is the $5 difference ($95 - $90) minus the $3 premium paid, totaling $2 per share ($200) .
To profit, the stock must fall below the strike price by more than the premium you paid. What Are Put Options and How Do They Work? - IG UK what is buy put option
Imagine stock XYZ is trading at $100. You believe it will drop soon.
The Ultimate Guide to Buying Put Options: Profit When the Market Falls The stock stays at $100 or rises
The security (stock, ETF, or index) the option is based on.
A is a financial contract that gives the buyer the right, but not the obligation , to sell an underlying asset (like 100 shares of a stock) at a predetermined price, known as the strike price . You can now sell the stock at the $95 strike price
You buy one $95 strike put option for a $3 premium. Cost: Total cost is $300 ($3 premium × 100 shares).