Selling puts is a risky strategy that involves buying a put option contract to protect against a decline in stock price. The trader hopes the stock will fall and they can sell the put option at a profit. If the stock doesn’t fall, the trader keeps the premium received for protecting their investment. They also have the right to sell the put option to another investor, but this is more difficult because of transaction costs. Selling puts is only appropriate when there is some reason to believe that the underlying stock may decline in value. The main risk of selling puts is that if the stock does not fall, it might increase in value, leaving you stuck with an expensive contract that you must keep until expiration. Selling puts can also be unprofitable if you are wrong about what direction the market is headed and end up selling at a loss.