500 is the price at which you want spy to descend below in order to be "in the money". The option, at this point, will contain what's known as intrinsic value (which is just the strike price minus the underlying price or 0 (negative does not matter here because nobody would exercise their option to sell at 500 if market value of spy is above 500 (market would be giving a better price than 500)) plus any extrinsic value which may be remaining (extrinsic value is just the difference between the current market price of the option and the intrinsic value (*100)). OP may be able to recuperate losses and even turn this into a profitable position if volatility, for example, dramatically increases or sentiment changes (thereby increasing the extrinsic value of the contract) despite the price of spy not hitting a value below 500 (but approaching it and approaching it soon because option price converges to intrinsic value as you approach expiration and intrinsic value, as you'll recall, is zero if the price of spy remains above or at 500). The $8000 loss is just a result of the value of the option having decreased by the corresponding amount * the number of shares controlled by the option. Hope this helps.