Short Put

A short put is a bearish options strategy in which an investor sells a put option contract. The seller of the put option contract agrees to sell the underlying security at a specified price (the strike price) on a specified date (the expiration date).

The seller of the put option receives a premium from the buyer of the put option. The premium is the price of the option. The seller of the put option hopes that the price of the underlying security will not fall below the strike price by expiration. If the price of the underlying security does not fall below the strike price, the seller of the put option keeps the premium.

If the price of the underlying security falls below the strike price, the seller of the put option may be required to sell the underlying security at the strike price. The seller of the put option will lose money if the price of the underlying security falls below the strike price. The maximum loss for the seller of the put option is the strike price minus the premium.

The short put is a bearish strategy because the seller of the put option profits if the price of the underlying security falls. The short put is a risky strategy because the seller of the put option may be required to sell the underlying security at a loss.

Here are some additional details about the short put:

* The short put is a leveraged strategy because the seller of the put option can profit from a small decline in the price of the underlying security.
* The short put is a short-term strategy because the seller of the put option is only obligated to sell the underlying security at the strike price on the expiration date.
* The short put is a high-risk strategy because the seller of the put option may be required to sell the underlying security at a loss.

The short put is a complex strategy and should only be used by experienced investors.