2
Put Option
A put option is a bet that the market will go down.
The Idea
Right now, Nifty is at 24,200.
You buy a Put option with strike price 24,000 and pay a premium of ₹150.
This means: you're saying "I think Nifty will go below 24,000".
For a put option, break-even works differently:
Break-even = Strike − Premium = 24000 − 150 = 23850
Nifty needs to fall below 23850 for you to profit.
Try It — Move the Price
Future Nifty Price24,200
22,00024,000 (Strike)27,000
Break-even
23,850
Intrinsic Value
₹0
Buyer Profit
₹-150
Seller Profit
₹150
Nifty is above the strike price (24000). The put option is worthless. Buyer loses the full premium of ₹150. Seller keeps the premium.
Profit/Loss Graph
Key Takeaways
- ✓Put buyer profits when market goes below break-even
- ✓Maximum loss for buyer = premium paid (₹150)
- ✓Break-even = Strike Price − Premium
- ✓Seller profits when market stays above strike price