Master the foundation of bearish strategy. Learn how Put Options allow you to profit from market declines with limited, defined risk in the Indian markets.
A Put Option gives you the right—but not the obligation—to sell an underlying asset at a specified price (the "strike price") before a certain date (the "expiration"). You pay a premium for this right. Puts are effectively a bet that the price of an asset will fall.
Imagine Stock ABC is currently trading at ₹1,000. You believe it is overvalued and will fall to ₹800 soon.
This is called a "protective put." It acts like insurance. If your stock price crashes, your Put Option will gain value, offsetting the losses in your stock portfolio.
If the stock price remains at or above ₹950 at expiration, the Put Option expires worthless. You lose your total premium of ₹12,500.