Puts are excellent when you have a very concrete timeframe and price target. However, when you lack both, the short is a better trade.
Aside: In your example, if you buy the puts for 30 cents per share, you are paying 24 cents in theta. Now, if you plan on selling before then, you don't pay the full penalty. However, If you plan on holding till expiration, your breakeven is 2.20 (just to get back the premium you paid). Now, if the equity fell to 2.20 and you shorted directly, you'd do far better than breakeven.
The people buying 2.50 weekly options that expired last Saturday would have lost all of their money. They may have been correct in their general directional prediction, but the contracts expired worthless.
I did not have a timeframe and I only had a rough price target. All I knew was that it was going to have to fall hard (2.40 price target) at one point before earnings. I could have bought long-dated puts, but at that time they were far more expensive and even the $3.00 puts were more than .60 cents per share (which would mean I'd just barely show a profit).
As another stark example of the quirks of pricing, check out the Oct20 AAPL puts. Many of the deep out of the money puts lost MTM value because its become less likely that the price will fall far enough. So especially if you come into the trade early, you end up paying quite a bit in theta.
Aside: In your example, if you buy the puts for 30 cents per share, you are paying 24 cents in theta. Now, if you plan on selling before then, you don't pay the full penalty. However, If you plan on holding till expiration, your breakeven is 2.20 (just to get back the premium you paid). Now, if the equity fell to 2.20 and you shorted directly, you'd do far better than breakeven.
The people buying 2.50 weekly options that expired last Saturday would have lost all of their money. They may have been correct in their general directional prediction, but the contracts expired worthless.
I did not have a timeframe and I only had a rough price target. All I knew was that it was going to have to fall hard (2.40 price target) at one point before earnings. I could have bought long-dated puts, but at that time they were far more expensive and even the $3.00 puts were more than .60 cents per share (which would mean I'd just barely show a profit).
As another stark example of the quirks of pricing, check out the Oct20 AAPL puts. Many of the deep out of the money puts lost MTM value because its become less likely that the price will fall far enough. So especially if you come into the trade early, you end up paying quite a bit in theta.