> For the complete documentation index, see [llms.txt](https://options--ai.gitbook.io/options-ai/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://options--ai.gitbook.io/options-ai/trading-strategies/buying-options/bearish-options.md).

# Bearish Options

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Bearish options are used by traders when they expect to see a decrease in the asset price.
{% endhint %}

Options AI offers four different types of bearish options:

* Put
* Strip (Classic Strategy)
* Bear Put Spread (Classic Strategy)
* Bear Call Spread (Inversion Strategy)

## **Put Options**

**Definition:** A put option is an on-chain contract that gives the buyer the right, but not the obligation, to sell ETH or BTC at a fixed price during a certain period.

### **How Put Options Work:**

<figure><img src="/files/U4DACpGvxPykWEVqG4l0" alt=""><figcaption></figcaption></figure>

* The buyer chooses the size, period, and strike price for the option contract.
  * **Size:** Number of option contracts being acquired.
  * **Period:** Number of days the contract will be active.
  * **Strike Price:** Pre-determined price at which the buyer can sell the asset.
* The premium is calculated based on the chosen parameters, and the buyer pays this amount in USDC.e using their wallet.
* Upon payment, the buyer receives an ERC721 option token representing the purchased option.
* The buyer can exercise the put option during the selected period using the ERC721 token.
* **Outcome:** If the price of the asset falls below the strike price, the buyer profits. If it does not, the option expires worthless, and the seller keeps the premium.

**Exercise Process:**

* The buyer sends the ERC721 token to the protocol to exercise the option and receives the profit in USDC.e.
* The contract must be exercised before the expiration time, provided the price is below the strike price.

**Available Periods and Strike Prices:**

* **Periods:** Ranging from 7 to 90 days.
* **Strike Prices:** ATM (current market price) and three OTM prices:
  * Market Price - 10%
  * Market Price - 20%
  * Market Price - 30%

**Example:**

* Market price of ETH: $2,337.
  * OTM Strike #1: $2,103
  * OTM Strike #2: $1,869
  * OTM Strike #3: $1,636

## **Advanced Strategies**

### **Strip Strategy**

<figure><img src="/files/3JsJVUf9KJsReWRbBLEi" alt=""><figcaption></figcaption></figure>

* **Structure:** One call option and two put options with the same strike price and expiration.
* **Profit Potential:** High profits if the price falls sharply, reasonable profits if the price rises.
* **Use Case:** Betting on rising volatility with a bearish bias.

### **Bear Put Spread**

<figure><img src="/files/FETzQBkrWhxFf2KOoNXN" alt=""><figcaption></figcaption></figure>

* **Structure:** Buying an ATM put option and selling an OTM put option with a lower strike price.
* **Profit Potential:** Decent profits if the price falls to a certain level with lower cost than an ATM put.
* **Use Case:** Betting on a moderate price drop.

### **Bear Call Spread**

<figure><img src="/files/cskVe2R2o6HyDAlQqZgS" alt=""><figcaption></figcaption></figure>

* **Structure:** Selling an ATM call option and buying an OTM call option with a higher strike price.
* **Profit Potential:** Profits if the price stays the same or falls, with immediate profit potential after purchase.
* **Use Case:** Betting on a stable or falling price without waiting for a drop.