Short Put

A short put's loss is large but not literally unlimited, since an underlying cannot fall below zero — the maximum loss is the strike less the premium, multiplied by the lot size, which is usually a very large number. The payoff is identical in shape to a covered call, which surprises people who consider one conservative and the other aggressive. It is often described as getting paid to buy at a lower price, which is true only if the trader genuinely wants the stock at that price and has the cash to take delivery. Writing puts collects small premiums repeatedly and occasionally pays out many times their total.