Directional
Long put
Buy a single put.
Index goes downOpens for a debitNew to optionsLoss capped
How it works
The simplest bearish position, and the usual way to hedge a portfolio you do not want to sell. Loss is limited to the premium.
What it costs you when you are wrong
The same decay problem as a long call, and puts are often more expensive relative to calls because demand for downside protection is persistent. You are paying for that protection whether or not the fall arrives.
The position
- 1Buy the put at the money
- Enter
- 6 trading days before expiry
- Exit
- hold to expiry
- Legs
- 1
Test it yourself
This runs against real historical market data. Nothing is uploaded, nothing is stored, and the result is not a prediction — it is what this rule would have done, on that index, in that year, with the costs shown.