11.15What is a put option?
1What is it?
A put option gives the right to sell at the strike price. Buyers profit if the price falls below strike − premium.
2Why does it exist?
Used as insurance for holdings, or to bet on a fall with limited loss.
3Diagram
Max profit
₹16,13,300
Max loss
₹11,700
Breakeven
₹24,820
4Quick revision
- Right to sell.
- Profits below strike − premium.
- Works like insurance.
5Knowledge check
Q1. Put strike 25,000, premium 180. Breakeven?Show answer
24,820.
Q2. Put buyers want price…?Show answer
Down.
Q3. Why are puts called insurance?Show answer
They gain when your holdings fall.