A put option gives its buyer the right to sell an underlying asset at a specified strike price under the contract’s exercise rules. Cash-settled puts pay the equivalent contractual amount. Buying a put can express a bearish view or protect an existing holding against some downside.
Payoff versus profit
Consider a hypothetical cash-settled put on one token with a 100 USDT strike and a 6 USDT premium. At an expiry reference price of 80 USDT, its payoff is 20 USDT and the buyer profits by 14 USDT before fees. At 100 USDT or above, it pays zero and the premium is lost.
Expiry breakeven is 94 USDT in this example. The calculation assumes a linear payoff in USDT and no additional costs.
Protection has a price
A purchased put’s value before expiry also depends on time remaining and implied volatility. Protection expires, and repeated purchases can become costly. A fully paid standalone long put limits the option loss to its premium before fees.
The put seller receives the premium but assumes potentially substantial downside obligations. Owning a put and selling one are therefore very different risk positions.