The loss to a buyer of bond put options is limited to the premium paid.

Question

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When a buyer purchases a bond put option, they pay a premium for the right to sell the bond at a specific price (the strike price) before the expiration date. If the bond's price declines below the strike price, then the buyer can exercise the option and sell the bond at the strike price, limiting their loss. If the bond's price doesn't decline and remains above the strike price, the buyer can let the option expire without exercising it, and they will only lose the premium paid. Therefore, the loss to a buyer of bond put options is limited to the premium paid.

The Loss to a Buyer of Bond Put Options Is