Put guarantee letter(redirected from Put Guarantee Letters)
Put guarantee letter
Put Guarantee Letter
A letter issued by a bank stating that the writer of a put option has enough money in a bank account to pay the exercise price should the holder of the put exercise the option. A put option allows the holder to sell a security at a given strike price at his/her discretion. A put guarantee letter reduces the risk to the holder by guaranteeing that the option will be covered if necessary.