this post was submitted on 21 Jul 2026
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This is a GOOD TAKE by YOU. The big danger on puts is that you can AT MOST make 100% of the investment if the company collapses completely to $0. If, for whatever reason (the market can remain irrational longer than you can remain solvent), the stock explodes upwards, you can be on the hook for WAY more than 100% if the stock increases dramatically.
Thats not how puts work. Thats shorting the stock directly.
A put is an options contract. You can never lose more than your purchase.
If you pay $5.00 for a Jan $50 strike, you pay $500 (1 contract is 100 shares). As the date comes closer it becomes worth less, but as it approaches $50 or goes below it also becomes worth more. You can make a lot of money on a far out of the money put that goes near or in the money.
If it was $50 in November that put might be worth $40 (x100) so $4,000 and you paid $500.
The put becomes worth nothing if its over $50 by strike date.
Its a much safer way to bet against something than directly shorting.
Ahhhh forgive my confusion, thank you for explaining.