Loading

Market Intelligence › Blogs And Updates

What is Put Option: First Step of Bearish Trading

Understand what is put option in Hindi – strike, premium, profit calculation, and bearish trading strategy. Complete guide for beginners.

Published by The Retail Trader · AUG 14, 2026 · Features

Understand what is put option in Hindi – strike, premium, profit calculation, and bearish trading strategy. Complete guide for beginners.

What is Put Option?

A put option is a contract that gives you the right — not the obligation — to sell a stock/index at a pre-decided price (strike price). You pay premium for this right.

In simple words:
• Do you think the price of Reliance will come down?
• You buy a put of ₹2,800 strike at ₹40 premium.
• If Reliance becomes ₹2,750 → Your profit = ₹10/share (₹50 - ₹40)
• If Reliance stays at ₹2,850 → Your loss = ₹40 (premium only)

Put option = Bearish view. You expect the price to come down.

Call vs Put:
• Call = price will go up (bullish)
• Put = price will go down (bearish)

Put Option Profit/Loss Calculation

Buy 1 Lot Nifty 24,500 PE at ₹60

Cost: ₹60 × 50 shares = ₹3,000

Keep these seven points in mind:
• 24,700 — Value: 0, Profit/Loss: -₹3,000 (max loss)
• 24,600 — Value: 0, Profit/Loss: -₹3,000
• 24,560 — Value: 0, Profit/Loss: -₹3,000 (breakeven)
• 24,500 — Value: 0, Profit/Loss: -₹3,000
• 24,400 — Value: ₹5,000, Profit/Loss: +₹2,000
• 24,300 — Value: ₹10,000, Profit/Loss: +₹7,000
• 24,200 — Value: ₹15,000, Profit/Loss: +₹12,000

Breakeven: Strike - Premium = 24,500 - 60 = 24,440

Max loss: Premium = ₹3,000 (limited) Max profit: Strike - 0 - Premium = ₹2,22,000 (if Nifty goes to 0, theoretical)

ITM, ATM, OTM for Puts

Nifty at 24,600:

Keep these three points in mind:
• ITM — Strike: Above spot, Example: 24,700 PE, Logic: Strike > spot = put has intrinsic value
• ATM — Strike: At spot, Example: 24,600 PE, Logic: Strike = spot
• OTM — Strike: Below spot, Example: 24,500 PE, Logic: Strike < spot = time value only

Put buyers: Buy ATM or lightly ITM for best risk-reward.

When to buy Put Option?

Best Conditions:
• Bearish view — market down trend, weak stock
• High VIX expected to go higher (volatility = put premium up)
• Resistance rejection — the stock gets rejected at strong resistance.
• Bad news expected — poor results, sector downgrade
• 5-7+ days to expiry — time value preserved

Put as Hedging (Insurance):
• Portfolio is worth ₹10L (long stocks)
• There is tension of market crash
• Buy Nifty Put = portfolio insurance
• If market crashes → put profit offsets portfolio loss
• If market up → put premium loss = insurance cost (acceptable)

Put Option Strategies

Strategy 1: Long Put (Simplest):
• Buy ATM/slightly ITM put
• Hold 2-5 days
• Target: 50-100% premium gain
• SL: 30-40% premium loss

Strategy 2: Bear Put Spread:
• Buy 1 ITM Put + Sell 1 OTM Put
• Lower cost than naked put
• Max profit = spread width - net premium
• Max loss = net premium paid

Strategy 3: Protective Put (Hedging):
• Hold shares + Buy Put
• = downside protection
• If stock crashes → put profit covers loss
• Cost = put premium (like insurance premium)

Common Put Option Mistakes

Keep these five points in mind:
• OTM put kharidna — 70% OTM expire zero
• hold on expiry — theta kills premium
• Trading without an SL — the premium can go to zero
• Naked put without hedging — theta + time = loss even if direction right
• Buying puts every time — markets go up 70% of the time, puts lose more often

FAQ

Q1: What is the maximum profit from put option?

Limited (strike - premium). If Nifty 24,500 PE at ₹60, max profit = 24,500 - 0 - 60 = 24,440 × 50 = ₹12,22,000 (if Nifty goes to 0 — impossible practically).

Q2: Who buys put option?

Bearish traders, hedgers (portfolio protection), arbitrageurs.

Q3: Can I buy Call and Put together?

Haan — straddle/strangle strategy. Advanced. Beginners avoid.

Q4: put option data on TRT?

theretailtrader.org/index-details/NSEI → Options Then. Full option chain available.

Q5: Is put useful for hedging?

Hey! Protective put = portfolio insurance. Protects from crashes. Cost = premium.

Option chain: theretailtrader.org/index-details/NSEI Pro (intraday + alerts): theretailtrader.org/pricing Telegram: @theretailtrader_in

Educational only. Options involve risk. NOT investment advice.

This article is for educational purposes only. It is not a buy or sell recommendation, a claim of guaranteed returns, or advisory guidance. Exchanges, SEBI and RBI change rules, rates and procedures from time to time, so verify every figure with your broker or an official source.

Back to Market Intelligence