Warning! Please Don't indulge in Deribatives trading without first understanding what Derivatives are, the difference between Options and Futures and margin trading.
And yes, you can of course make a lot of money in a falling stock market the same way you can make money in a rising stock market.
As you can see from the picture (click to enlarge please), State Bank of India went down by 5.8%, the above picture show a rise of 137% (currently it further went down to 7% and the put option premium went up by 180%).
I didn't buy the option at 37 rupees. I paid 42 ruppe for the same :-) There was an impending correction in the offing and I believed that large caps including Reliance, ICICI Bank and SBI will lead the correction. Of the above stocks, SBI had gained the most so I concluded that it might fall the most. I never expected it to fall this much in a day, but then RBI had been in my favor just this once. ( I lost during the P-Notes announcement since I was bullish), and I was bearish not because I knew that RBI would increase the cash Reserve Ratio.. I was just plain Lucky with the news though a Correction would have come anyway...
Trade in Options at your own risk!!!