The buyer of a put option has the right, but not the obligation to sell the underlying asset at a specified price (strike price) at or before a specified date (expiry of the option). The risk of the buyer of the put option is limited to the amount of the premium paid, plus transaction costs. The potential for profit is unlimited after the price of the underlying asset falls below the strike price. The value of the put option rises when the price of the underlying asset falls and/or the market volatility is rising.
The long put option strategy is most suitable in the following cases:
P&L at expiry