put


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Put

An option granting the right to sell the underlying futures contract. Opposite of a call.

Put Option

An option contract in which the holder has the right but not the obligation to sell some underlying asset at an agreed-upon price on or before the expiration date of the contract, regardless of the prevailing market price of the underlying asset. One buys a put option if one believes the price for the underlying asset will fall by the end of the contract. If the price does fall, the holder may buy and resell the underlying asset for a profit. If the price does not fall, the option expires and the holder's loss is limited to the price of buying the contract. Put options may be used on their own or in conjunction with call options to create an option spread in order to hedge risk.

put

1. An option that conveys to its holder the right, but not the obligation, to sell a specific asset at a predetermined price until a certain date. In most cases, puts have 100 shares of stock as the underlying asset. For example, an investor may purchase a put option on GenCorp common stock that confers the right to sell 100 shares at $15 per share until September 21. Puts are sold for a fee by other investors who incur an obligation to purchase the asset if the option holder decides to sell. Investors purchase puts in order to take advantage of a decline in the price of the asset. Also called put option. Compare call. See also guarantee letter, synthetic put, transferable put right.
2. Sale of an issue of bonds before maturity by forcing the issuer to buy at par. Few bond issues permit the holder this option.
Putting things into perspective: How to hedge, using puts. How to speculate, using puts.

A put option has an inverse relationship to the underlying security. As the value of the stock increases, the value of the put decreases. Like calls, puts can be used for both hedging and speculation. Puts can be purchased in conjunction with stock ownership as a form of insurance (that is, a hedge) against downside loss on a stock. If the stock price declines, the put holder can either sell the put and keep the stock, or exercise the put and sell the stock at the put's strike price. In either case, the increased value of the option will offset the stock loss to some degree. If the stock price rises beyond a certain level, the put will expire worthless. In this case, the put holder will lose the premium paid for the option but will still participate in the upward stock movement. The break-even point occurs when the stock price advances beyond the put's strike price plus the premium. Puts also can be used speculatively without a position in the underlying security. Instead of selling a stock short, an investor who anticipates a decline in the price of a stock can buy an at-the-money put. If the stock price rises, causing the put to expire worthless, the maximum loss is the premium paid for the put. But if the stock price declines substantially, the investor could make profits that far exceed the initial cost of the put.

Henry Nothnagel, Senior Vice President—Options, Wachovia Securities, Inc., Chicago, IL

put

To force the seller of a put option to purchase shares of stock at the stipulated price. Puts are exercised by the owner only when the market price of the underlying stock is less than the strike price. Also called put to seller.
References in classic literature ?
He gathered up the letters thoughtfully, smoothing them with his hand; put them into their little bundle; and placed it tenderly in his breast again.
3 : to cause to undergo something <Our class puts them to shame.
At the same time network plans are put in place for growth, institutions are making sure their processes are solid enough to handle traffic spikes and changes.
Well, we get through that okay, but we learn some ugly things about ourselves and that is typical of which, the example I always use, is the air tasking order we used to put out the air power plan every day in Desert Storm, we had to fly on an airplane out to the aircraft carrier because we weren't able to transmit it from the shore to the sea.
That was some show they put on Wednesday, just down a stone tunnel from Zeus' old temple.
2 Put your right phalanges in and you shake them all about,
Another strategy is buying a put option to protect an existing stock position, which is like buying downside price insurance.
The ruling outlined three fact patterns, in which the IRS assumed that (1) an inverse relationship exists between the value of the underlying equity and that of each option position; (2) because of the inverse relationships, each option position substantially diminishes the risk of holding the equity; (3) the acquisition of the put option substantially diminishes the risk of loss for the combined position, consisting of the equity and the QC on that equity; and (4) the call option is a QC under Sec.
It's tough to put money aside in the early years of a business, but the earlier you start to save toward retirement (or any other goal), the better you'll do in the long run.
Daniel Arrenhius Shot Put, Discus Mountain View HS Orem
In the track world, it's becoming more of a thing,'' said Godina, NCAA shot put and discus champion at UCLA, a four-time world shot put champion since then and the world's fifth-ranked shot putter last year, eight years after concluding his career with the Bruins.
If FM does not exercise the option, X may elect to (1) use the property itself for the headlease's remaining term, (2) lease the property to another person for the headlease's remaining term or (3) compel FM to lease the property for the 10-year put renewal term of the sublease.