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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
The right to SELL a stock at a specific price. You profit if the stock goes down.
Why It Matters
Puts are like insurance for your portfolio. If you own $50,000 in stocks and buy puts, you're protected if the market crashes. Hedge funds used puts to profit during 2008 and 2020 while everyone else lost money.
Key Points
- Buying puts = bearish bet or portfolio insurance against drops
- Puts increase in value as the stock falls below the strike price
- Protective puts on stocks you own = peace of mind during volatile markets
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Common Questions
The right to SELL a stock at a specific price. You profit if the stock goes down. Puts are like insurance for your portfolio. If you own $50,000 in stocks and buy puts, you're protected if the market crashes.
Puts are like insurance for your portfolio. If you own $50,000 in stocks and buy puts, you're protected if the market crashes. Hedge funds used puts to profit during 2008 and 2020 while everyone else lost money.
Buying puts = bearish bet or portfolio insurance against drops
Puts increase in value as the stock falls below the strike price
Protective puts on stocks you own = peace of mind during volatile markets