The Long Put
The Long Put is another of the most basic of options strategies you can use when trading options. It is easy to understand and you know your risk when you enter the position. Most 
people do however, forget about the effect of Delta on the position.
When purchasing an option, I like to have at least 30 days and preferably 45 to 60 days before expiration. This helps reduce the effects of time decay which really begins to accelerate at 30 days and really picks up with less than 14 days. If I get into a long option position at 45 to 60 days I like to try and exit at about 28 to 30 days left.
Let’s take a look at Apple (AAPL) options.
Today AAPL is trading at about $315.00. If you believe that over the next couple of weeks AAPL is going to go down one strategy you could use is to purchase an at them money (ATM) Put option.
Going about 37 days out the $315.00 is trading for $12.80. This is an ATM money Put option so the Delta is about .50. This means that if AAPL goes from $315.00 to $300.00, a drop of $15.00, you Put option will go up about half of that or $7.50 (excluding any time decay) because it has a Delta of .50. The Delta roughly tells you how much your option price will change for every $1.00 change in the underlying price.
Your total risk on this is the price of the Put option or $1,280.00 per option contract.
Personally, if I were to buy an option, I would prefer a Delta .70 or greater. In this case, the Delta .70 option is the $335.00 Put. I will have to pay more for this because it is in the money (ITM) so it will cost me $25.30 or $2,530.00 per contract. The advantage to the Delta .70 is that the option price will change at about $.70 per $1.00 of the underlying. So, if AAPL drops $15.00 my option value will increase by $10.50.
A higher Delta also reduces the effects of time decay since part of the value of the option is ITM. You can even go close to a Delta 1 which would have little or no time decay, but you will have to pay for it.
The Delta .90 for AAPL in this example is the $370.00 Put which would cost you about $56.00 or $5,600.00 per contract. The advantage to this is that your option will go up $.90 per every $1.00 the underlying drops and you will have little time decay.
