Ever look at a stock and think: “That valuation is way too high”? If you want to profit on the downside, you could short-sell—or you could try the Long Put strategy.
📒 The Options Handbook breaks down the key points of using a Long Put for shorting—
▶ What Is Using a Long Put to Go Short? 🤔
A Long Put means you pay a premium to gain the right to sell the stock at a set price in the future.
If you don’t own the shares, a Long Put is simply betting on the stock’s drop by profiting from the rising value of the put—not by actually selling shares.
▶ Both Are Bearish—So What’s the Difference? ⚖️
1. Profit mechanics
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Long Put: Gains when the put option increases in value as the stock falls—no borrowing or owning stock needed.
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Short selling: Borrow shares, sell high, buy back lower—profit from price difference.
2. Risk limits
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Long Put: Loss is limited to the premium paid—suitable for risk-conscious investors.
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Short selling: Loss is unlimited—if the stock surges, you may be forced to cover at huge cost.
3. Costs
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Long Put: No borrowing fees—just the option premium.
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Short selling: Requires paying borrow fees.
4. Time factor
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Long Put: Suffers from time decay; needs the stock to drop quickly.
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Short selling: No set expiration—better for slow declines, though subject to recall risk.
🎁 The Options Handbook features many more beginner-friendly and advanced strategies—now available in the Tiger Coin Center! 🐯
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>> Click here for the Simplified Chinese version <<
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