Put option
Also called: put, puts, put options
A contract giving the buyer the right, but not the obligation, to sell the underlying at the strike price.
A put buyer gains when the price falls below the strike by more than the premium, which makes puts a form of protection. A put seller receives the premium and can lose heavily if the price falls sharply.
Learn more in these lessons
- Call and put optionsWhat are call and put options, and what does each side risk?
- Option payoff diagrams and breakevensHow do you work out where an option position makes or loses money?
- Hedging with derivativesHow can derivatives protect a portfolio, and what does that protection cost?
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