Buying a put limits your maximum loss to the premium you pay, plus fees. You can also build a position that profits from either a large fall or a rise, though it will lose money under some other price outcomes.

A put gives you the right to sell its underlying asset at the agreed strike price, with no obligation to do so. A fall in price alone does not guarantee a profit: the option’s payoff must exceed its cost. [OCC’s Options Industry Council](https://prd-web.optionseducation.org/strategies/all-strategies/buying-index-puts)

Suppose you buy a six-month put with a $100 strike for a $6 premium. At expiration, the results per underlying unit are:

| Underlying price | Put payoff | Profit or loss |
|---|---:|---:|
| $120 | $0 | −$6 |
| $100 | $0 | −$6 |
| $97 | $3 | −$3 |
| $94 | $6 | $0 |
| $80 | $20 | +$14 |

These hypothetical figures exclude fees. Multiply them by the contract’s specified multiplier to get dollar amounts. The maximum loss is $6 per unit, however high the underlying price rises, so you can size the purchase around what you can afford to lose.

To profit from a large move in either direction, you could buy a put and a call with the same strike and expiration. This is a *long straddle*. With a $100 strike and a combined premium of $10, it makes a profit at expiration below $90 or above $110. The maximum loss is $10 per unit at an underlying price of $100. Profit depends on how far the price moves in either direction. [OCC: Long straddle](https://prd-web.optionseducation.org/strategies/all-strategies/long-straddle)

A more specifically bearish strategy is a *put backspread opened for a net credit*. You sell one higher-strike put and buy two lower-strike puts, all with the same expiration. [OCC’s strategy guide](https://www.optionseducation.org/getattachment/007fe864-029a-490d-8dc1-3b58bd558f64/options-strategies-quick-guide.pdf%3Flang%3Den-US)

For example, suppose you:

- Sell one $100 put for $7.
- Buy two $90 puts for $3 each.
- Receive $1 per unit upfront.

The profit at expiration is:

\[
1-\max(100-S,0)+2\max(90-S,0),
\]

where \(S\) is the final underlying price.

| Final price | Profit or loss per unit |
|---|---:|
| $110 | +$1 |
| $100 | +$1 |
| $95 | −$4 |
| $90 | −$9 |
| $81 | $0 |
| $70 | +$11 |

This position makes a small profit if the price rises and a larger profit if it falls far enough. A moderate fall produces a loss, with the maximum loss of $9 per unit occurring at $90. Whether you can open it for a net credit depends on market prices.

These calculations assume the option positions are settled as intended. Physical delivery, automatic exercise or assignment can leave you with underlying positions to manage. Gold ETF options and gold futures options also have different contract specifications.

A recent rise does not guarantee a fall within six months. Even if you correctly predict a fall, it may be too small to make your options profitable.