I forgot you wanted a blonde version.
A put is an option contract that lets you bet a stock's price is going down. Similar to shorting but:
1. Limited risk but the 100% loss scenario is VERY likely. When I traded them very actively, 40% of them expired worthless. And that's an unusually low number for an options buyer.
2. Better than shorting because if the stock goes down, say, 5%, it's likely the puts have gone up in value 50% or more.
3. Worse than shorting because the likelihood of making money is far less. If I would've shorted PFE instead of buying puts, I'd have made money already. Instead, I'm sitting here waiting for it to go down enough for my puts to be profitable.
4. Reiterating #1, the loss potential is "only" 100%. Short a stock that becomes a 10-bagger and your loss is 900%.
