InsiderFlow › Glossary › What is a put option?
A put is the option granting the right to sell a security at a fixed price: it profits when the market falls.
You buy a put when you expect a decline, or to insure your portfolio: if the stock crashes, the put still guarantees you the strike price. It's the simplest way to protect yourself without selling your positions.
In the 2008 crash, whoever held puts on financial stocks — like the protagonists of "The Big Short" — turned disaster into enormous gains. The insurance has a price: in calm markets puts expire worthless, year after year.
On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.
The goal is similar, the risk isn't: with a put you lose at most the premium; with a short, losses are unlimited.
Puts bought on stocks you own: insurance with a premium and a deductible, like car insurance.