Terms

Put option

Nick Name
Put
Parent term

Put Option gives the holder the right, but not the obligation, to sell a specified amount of an underlying security at a particular time within a specified time frame. A derivative contract between two parties, it’s available on a wide range of assets, including stocks, bonds, indexes, commodities, futures, and currencies. A put option is bought if the trader expects the price of the underlying to fall within a certain time frame, as it becomes more valuable as the price of the underlying stock decreases, and loses its value as the underlying stock increases.

  • You buy a put when you are bearish on a stock (or want protection when you are bullish)