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Strategy View
Investor thinks that the market will fall significantly in the short-term.
Strategy Implementation
Put option is bought with a strike price of a.
The more bearish the investor is, the lower the strike price should be.
Upside Potential
Profit potential is unlimited (well, not really unlimited of course as
the market can not fall below zero).
Break-Even Point at Expire
Strike price minus premium paid.
Downside Risk
Limited to the premium paid - incurred if at expire the market is at or
above the strike a.
Margin
Not required.
Comment
If the market does little then the value of the position will decrease
as the option time value falls.
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