The converse strategy to the long put. The short put strategy involves the selling of put options. Selling of put options is more commonly known as put writing.
Payoff summary
Maximum profit: The premium received.
Maximum loss: Strike price minus the premium received, if the stock falls to zero.
Breakeven
Strike price minus the premium received, provided the result is zero or above.
Amounts are per share before fees. Multiply by the shares covered by the position; standard equity options usually cover 100 shares per contract. If a maximum profit or loss calculation gives a negative amount, use zero. These figures assume matching contracts held to expiration and do not include financing or early assignment.
Financial mechanics reviewed:
Sources: OIC strategy reference; OIC assignment guidance. Formulas use the stated payoff assumptions; examples are illustrative, not market quotes. Editorial standards and corrections.