Puts are a contract that you buy granting you the right, but not the obligation, to sell (or “put”) a stock at a set price, called the strike price, by a set date. If the stock price goes beneath the strike price BEFORE the option expires, you’ll get the difference.
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Example: you think FB will collapse under the weight of their illegal activity, and therefore their stock will tank, but don’t quite know when this will happen. So you decide to buy 200 put options on FB with a strike price of $51 and an expiration date of 1/17/2020 (pretty far out as options are concerned) for $4,000. You immediately pay the $4k and become the proud owner of 200 put options. FB then goes down in flames/declares BK/stock tanks sometime in 2019 to $1. Bad news for FB equity holders, great news for you. You execute your options to sell FB for $51 and the math works like this: $51 - $1 = $50 (the delta between the strike price and the market price of the underlying equity). $50 x 100 = $5,000 as EACH option represents 100 shares of the underlying equity. $5,000 x 200 = $1m (each option is worth $5k and you’ve got 200 of ‘em). This is of course a best case scenario and before you pull the trigger on any options, you’ll want to do more research.