What Happens When You Buy A Put Option Apr 2026

Typically, one standard equity put contract represents 100 shares of the underlying stock.

What happens at expiration depends on the stock price relative to your strike price: what happens when you buy a put option

You pay a premium to the seller to acquire this right. Typically, one standard equity put contract represents 100

Buying a put option gives you the right, but not the legal obligation, to sell an underlying asset at a predetermined "strike price" until a specific "expiration date". This is fundamentally a position; you profit when the underlying asset's price falls. Core Mechanics of a Long Put When you purchase a put, you are "long" the option. This is fundamentally a position; you profit when

Your maximum potential loss is strictly limited to the premium paid . Unlike short selling, you cannot lose more than your initial investment. Outcomes at Expiration

Put options: What they are, how they work and how to buy and sell them