Long Put
Components
A long put is simply the purchase of one put option.
Risk / Reward
Maximum Loss: Limited to the net premium paid for the option.
Maximum Gain: Unlimited as the market sells off.
Characteristics
When to use: When you are bearish on market direction and bullish on market volatility.
Like the long call a long put is a nice simple way to take a position on market direction without risking everything. Except with a put option you want the market to decrease in value.
Buying put options is a fantastic way to profit from a down turning market without shorting stock. Even though both methods will make money if the market sells off, buying put options can do this with limited risk.
yes, we can hedge a scrip to decresing in value through long put option.