Put Option

Key Highlights

• A put option is a financial agreement that lets you sell a specific amount of something- like stocks, commodities, or currencies- at a set price (called the strike price) within a certain time frame. You don’t have to sell, but you have the right to if you want.

• Types of put options includes American and European-style put option.

What is Put Option?

A put option is a financial agreement that lets you sell a specific amount of something- like stocks, commodities, or currencies- at a set price (called the strike price) within a certain time frame. You don’t have to sell, but you have the right to if you want. The person selling you the option, though, must buy the asset if you choose to sell.

Types of Put Options

• American Put Option: You can sell anytime before the expiration date.

• European-Style Put Option: Can only be exercised on the expiration date.

Why Use a Put Option?

• Protection: It’s like insurance- buy a put option to guard against losses if an asset you own drops in value.

• Profit: You can make money if you think the asset’s price will fall.