Buying puts on SHLD Sears stupid or smart stocks

Sears is in deep doodoo. Shares are already beaten down to $3.82 and are headed nowhere but down, if you look at their mounting debt and falling sales. Buying puts on this stock seems like a logical play, and there is significant open interest already, but I have one concern: what happens if a company actually files for bankruptcy while you are holding puts? Do they lose their value the same way a bullish position would? I wouldnt be going out longer than February at the latest, but that seems like plenty of time for the ship to go under.

Sears is in deep doodoo. Shares are already beaten down to $3.82 and are headed nowhere but down, if you look at their mounting debt and falling sales. Buying puts on this stock seems like a logical play, and there is significant open interest already, but I have one concern: what happens if a company actually files for bankruptcy while you are holding puts? Do they lose their value the same way a bullish position would? I wouldnt be going out longer than February at the latest, but that seems like plenty of time for the ship to go under.