: This is a neutral-to-bullish strategy. You receive a premium in exchange for the obligation to buy the stock at the strike price if it falls below that level.
: This is a bearish strategy. You pay a fee (premium) for the right to sell a stock at a specific price (strike price). Goal : Profit from a significant drop in the stock price. Max Risk : Limited to the premium paid. sell a put and buy a put
: Generate income from the premium or acquire stock at a discount. : This is a neutral-to-bullish strategy
: Substantial; you could be forced to buy a stock that has fallen significantly. Combining Them: The Put Spread sell a put and buy a put