Short Put

A short put is an options trading strategy in which an option writer sells a naked put in the hope that the underlying fails to reach the strike price thus expires worthless, in which case the writer’s profit is derived from the options premium: the payment for the options received from the buyer upfront. It is a risky strategy because if the underlying falls below the strike price i.e. moves in-the-money and is exercised, the option writer has to deliver the underlying to the buyer at the option strike price.

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