# What Are the Risks of Writing a Put Option? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## What Are the Risks of Writing a Put Option?

The primary risk of writing a put option is a sharp decline in the price of the underlying cryptocurrency. If the price falls below the strike price, the writer is obligated to buy the crypto at the higher strike price from the option holder.

This means they could be forced to purchase an asset for a price significantly above its current market value. The maximum potential loss is substantial and occurs if the crypto's price drops to zero, forcing the writer to buy a worthless asset at the strike price.

- [How Does Selling (Writing) a Covered Call Differ from Selling a Naked Call?](https://learn.greeks.live/path/how-does-selling-writing-a-covered-call-differ-from-selling-a-naked-call/)

- [What Is the Risk to a Short Option Writer If IV Increases Sharply?](https://learn.greeks.live/path/what-is-the-risk-to-a-short-option-writer-if-iv-increases-sharply/)

- [How Does the Change in the Underlying asset’S Price Affect the Option Writer’s Margin Account?](https://learn.greeks.live/path/how-does-the-change-in-the-underlying-assets-price-affect-the-option-writers-margin-account/)

- [Can an Interest Rate Swap Be Used to Hedge against Falling Interest Rates?](https://learn.greeks.live/path/can-an-interest-rate-swap-be-used-to-hedge-against-falling-interest-rates/)

- [What Is the Theoretical Maximum Loss When Writing a Naked Call Option?](https://learn.greeks.live/path/what-is-the-theoretical-maximum-loss-when-writing-a-naked-call-option/)

- [How Does a “Put Option” Allow a Trader to Profit from a Falling Asset Price?](https://learn.greeks.live/path/how-does-a-put-option-allow-a-trader-to-profit-from-a-falling-asset-price/)

- [What Is the Term for the Seller of a Put Option?](https://learn.greeks.live/path/what-is-the-term-for-the-seller-of-a-put-option/)

- [How Does the Absence of Theta Decay Affect the Perpetual Option Writer?](https://learn.greeks.live/path/how-does-the-absence-of-theta-decay-affect-the-perpetual-option-writer/)

## Glossar

### [Writing a Put Option](https://learn.greeks.live/area/writing-a-put-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Action ⎊ Writing a Put Option, also known as selling or shorting a put, is the action of creating and selling a contract that obligates the writer to purchase the underlying crypto asset from the buyer at a predetermined strike price on or before the expiration date.

### [Maximum Potential Loss](https://learn.greeks.live/area/maximum-potential-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Exposure ⎊ Maximum Potential Loss (MPL) within cryptocurrency, options trading, and financial derivatives represents the theoretical worst-case financial detriment an investor could incur from a specific position or portfolio.

## Discover More

### [What Are the Risks of Using a Poorly Chosen Elliptic Curve?](https://learn.greeks.live/path/what-are-the-risks-of-using-a-poorly-chosen-elliptic-curve/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Risks of Using a Poorly Chosen Elliptic Curve?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Magnetically-Levitated-Asset-Core-Reflection-of-Decentralized-Derivatives-Exchange-Mechanism.webp)

A weak curve can allow attackers to efficiently solve the ECDLP, compromising private keys and all digital signatures.

### [How Does a Miner Use a Put Option to Lock in the Value of Their Future Cryptocurrency Earnings?](https://learn.greeks.live/path/how-does-a-miner-use-a-put-option-to-lock-in-the-value-of-their-future-cryptocurrency-earnings/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Miner Use a Put Option to Lock in the Value of Their Future Cryptocurrency Earnings?](https://learn.greeks.live/wp-content/uploads/2025/10/Biomimetic-Spherical-Orifice-Projection-Mechanism-Simulating-Token-Allocation-Volatility-Metrics.webp)

Buying a put option sets a minimum selling price (floor) for future-mined coins, hedging against a price drop.

### [What Unique Risks Do Crypto Derivatives Pose to a Clearing House?](https://learn.greeks.live/path/what-unique-risks-do-crypto-derivatives-pose-to-a-clearing-house/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Unique Risks Do Crypto Derivatives Pose to a Clearing House?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Structure-High-Frequency-Algorithmic-Trading-Mechanism-Visualization.webp)

Extreme price volatility, 24/7 market operation, and operational risks related to digital asset custody.

### [How Can a Combination of a Call and a Put Option Be Used to Create a 'Straddle' Strategy?](https://learn.greeks.live/path/how-can-a-combination-of-a-call-and-a-put-option-be-used-to-create-a-straddle-strategy/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can a Combination of a Call and a Put Option Be Used to Create a 'Straddle' Strategy?](https://learn.greeks.live/wp-content/uploads/2025/10/Calibration-Disc-Mechanism-Under-Low-Light-Representing-Digital-Asset-Volatility-Surface-Mapping.webp)

A straddle combines a call and a put with the same strike and expiration to profit from high (long) or low (short) volatility.

### [How Can a Put Option Seller Mitigate Their Potential Loss?](https://learn.greeks.live/path/how-can-a-put-option-seller-mitigate-their-potential-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can a Put Option Seller Mitigate Their Potential Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Actuation-Mechanism-Over-Blockchain-Data-Ledger-Illustrating-Tokenized-Asset-Settlement.webp)

Mitigation involves selling cash-secured puts or using a put spread by buying a lower-strike put to limit the maximum loss.

### [Define "Maximum Loss" and "Maximum Gain" for a Short Put Option](https://learn.greeks.live/path/define-maximum-loss-and-maximum-gain-for-a-short-put-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define "Maximum Loss" and "Maximum Gain" for a Short Put Option](https://learn.greeks.live/wp-content/uploads/2025/10/Glass-Fulcrum-Balancing-Digital-Asset-Volatility-Against-Option-Contract-Strike-Price-Delta-Hedging.webp)

Maximum gain is the premium; maximum loss is the strike price minus the premium if the underlying asset price hits zero.

### [What Is the Difference between a "Call Option" and a "Put Option"?](https://learn.greeks.live/path/what-is-the-difference-between-a-call-option-and-a-put-option-3/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between a "Call Option" and a "Put Option"?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Algorithmic-Trading-Structures-Reflecting-Volatility-Surface-Skew-in-Digital-Asset-Derivatives.webp)

Call uparrow Buy Right. Put downarrow Sell Right. Right ≠ Obligation. 100%.

### [What Is the Margin Requirement for Writing a Naked Option Compared to a Covered Option?](https://learn.greeks.live/path/what-is-the-margin-requirement-for-writing-a-naked-option-compared-to-a-covered-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Margin Requirement for Writing a Naked Option Compared to a Covered Option?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Dual-Tone-Compact-Containers-Reflecting-Volatility-and-Collateralized-Debt-Positions-in-DeFi.webp)

Naked options require high margin due to unlimited risk; Covered options require minimal margin as the underlying asset acts as collateral.

### [Define the Conditions for a Put Option to Be Considered Out-The-Money (OTM)](https://learn.greeks.live/path/define-the-conditions-for-a-put-option-to-be-considered-out-the-money-otm/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define the Conditions for a Put Option to Be Considered Out-The-Money (OTM)](https://learn.greeks.live/wp-content/uploads/2025/10/Modular-Architecture-of-Layered-Decentralized-Exchange-Asset-Structures-Comprising-Tiers.webp)

Underlying Price > Strike Price for a Put option to be Out-The-Money.

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