Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “How does a put option make money?” A put option contract (and we’re probably specifically talking about a long put option contract) makes money in two different scenarios. The first scenario is that the stock continues to move lower or makes a large move lower during the time that you’re holding that put option contract. This would be the most obvious case because many option buyers, especially put option buyers, are looking for the stock to make a significant move lower before expiration. The second scenario in which a put option would make money is if we see an increase in overall volatility for the underlying stock that you’re trading. Even if the stock doesn’t make a significant move lower, you could see a big increase in the underlying stock’s implied volatility and this would suggest that most people are anticipating a big move in one direction or another and as a result, they’re bidding up the price and the value of all option contracts on both sides of which includes all put option contracts. Now, be careful because although the put option contract will make money in these two scenarios, what is going to drag the put option value lower is going to be time decay. As we get closer to expiration, we need these two other things to work out in our favor, the directional move lower in the underlying stock and an increase in implied volatility and those have to work out in our favor before the effect of time decay erodes the value of the contract down to zero. Again, this is how a put option contract makes money, directional move generally, increase in implied volatility and you got to do both of these things before time decay eats away at the value of the contract. Hopefully this helps out. As always, if you guys have any questions, let me know and until next time, happy trading.