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 periodicals archive ?
Following a handball, Aaron Chapman put away a penalty to make it 2-0 but the Cons got back into the game with a penalty of their own from Ged Livingstone who struck again to level things up once more.
At the other end of the scale, male and female savers in London have the lowest amounts put away in savings as a share of their annual wages, at 18% and 30% respectively.
WIZARDRY: Ashtor's billiard table can be put away and is just one feature in the five-bedroomed Woolton home
He believed that ISAs were doomed to failure in getting the poor to put away money in any large numbers.
High living costs have been swallowing up families' savings, while record low interest rates have given consumers little return on what they have been managing to put away.
When you don't put away the chances you have, especially in the "It's disappointing we didn't put away the chances we created.
Dylan Riley put away a Canel pass to tie the score 1-1 in the 69th minute for the Matadors.
Of course, if you need some of your pay rise to cope with soaring fuel bills you could always put away half.
Other plans designed to reduce health insurance costs for small businesses include medical savings accounts, which allow people to put away pre-tax dollars to pay for their own health benefits, and the recently introduced Self-Employed Health Care Affordability Act, which offers 100% tax deductibility of health insurance costs for the self-employed.
Nearly a third - 31 per cent - have nothing put away for a rainy day.
Attack America and New York will put away its big-city nuttiness and wrap itself in the American flag, just like every other town from the mountains, to the prairies, to the oceans white with foam.
By the time the boys are 18 I hope to have put away at least pounds 5,000 in a child bond from Scottish Friendly.