Short Put Definition.

A short put is a bearish strategy that involves being short (selling) a put option on a security. The purpose of the short put is to profit from a decline in the price of the underlying security below the strike price of the put option.

The maximum profit for a short put is equal to the premium received for selling the put. The maximum loss is equal to the strike price of the put minus the premium received.

For example, let's say you sell a put on a stock with a strike price of $50 for $2. If the stock price falls below $50, you will make a profit. If the stock price rises above $50, you will incur a loss.

Is a short put Bullish?

A short put is bullish because it is a bet that the underlying stock will go up. The investor is selling a put, or the right to sell the underlying stock at a set price, and is hoping that the stock will go up so that they can buy it back at a lower price. If the stock does go down, the investor will be forced to buy the stock at a higher price, and will lose money. What if a put option goes below strike price? If a put option goes below the strike price, it is said to be "out of the money" and the option will expire worthless.

Is short put unlimited loss? The short put is a bearish strategy used when the trader believes the price of the underlying asset will fall. The maximum loss for the short put is equal to the strike price of the put minus the premium paid. The maximum loss occurs if the price of the underlying asset falls to zero. Is a short put the same as a long call? No, a short put is not the same as a long call. A short put is a bearish strategy that involves selling a put option, while a long call is a bullish strategy that involves buying a call option.

What happens if I don't exit option on expiry?

If you don't exit your option on expiry, then your option will either be exercised or it will expire worthless.

If your option is in the money (ITM) at expiry, then it will be automatically exercised by the options exchange. This means that the underlying security will be bought or sold at the strike price of the option, and you will be assigned the resulting position.

If your option is out of the money (OTM) at expiry, then it will expire worthless and you will lose the entire premium that you paid for the option.