A Short Put Option is a position in which a trader/investor Sells or “Sells to Open” a Put Option Contract thereby promising to buy the underlying asset or security at the pre-determined “strike Price” on or before the pre-determined date “Expiration Date” in exchange for receiving the premium.
The term “going short” refers to opening a position by selling a security (not buying one), and applies to any tradable instrument that a trader/investor ”sells to open” including put options.
A trader/investor would sell “Short Puts” in anticipation of the price of the underlying asset rising in value, and short puts are often sold to receive the premium and thereby acquire the security at a discount.
