put option

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Put option

This security gives investors the right to sell (or put) a fixed number of shares at a fixed price within a given period. An investor, for example, might wish to have the right to sell shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.

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 option

See put.

Put option.

Buying a put option gives you the right to sell the specific financial instrument underlying the option at a specific price, called the exercise or strike price, to the writer, or seller, of the option before the option expires.

You pay the seller a premium for the option, and if you exercise your right to sell, the seller must buy.

Selling a put option means you collect a premium at the time of sale. But you must buy the option's underlying instrument if the option buyer exercises the option and you are assigned to meet the contract's terms.

Not surprisingly, buyers and sellers have different goals. Buyers hope that the price of the underlying instrument drops so they can sell at the exercise price, which is higher than the market price. This way, they could offset the price of the premium, and hopefully make a profit as well.

Sellers, on the other hand, hope that the price stays the same or increases, so they can keep the premium they've collected and not have to lay out money to buy.

put option


put option

References in periodicals archive ?
If you've been shorting WTI while at the same time going long put options, you'll have made a lot of money in the last few weeks.
With the share buyback via put options, Walter Meier will acquire up to 25 percent of the share capital currently outstanding.
That was yet another indication that index put options on the financial sector were cheap during the crisis.
The 2012 put options, combined with the remaining 2011 put options, guarantees revenue stream for the next 18 months.
However, call and put option buyers are willing to pay more as the chances of prices moving in any direction are high.
If the Nifty does not fall below 5,100 for a week or two, the put option exposure alone could lead to a loss of some value due to time decay.
Fully investigating these put option purchases, by contrast, has the potential to unearth networks behind these attacks.
The banker comes back with an option strategy that offers a significantly reduced option premium up-front, because it combines a written call option with a purchased put option.
The number of put options outstanding in the nearest three expiration months is more than three times the number of call options.
The strategy that employs a combination of call options is termed 'bear call spread', while the one that uses put options is termed 'bear put spread'.
If you purchased Apple securities and/or sold put options on Apple shares between December 1, 2005 and August 11, 2006, inclusive, you may be a member of the class and have until October 24, 2006, to move the Court to serve as lead plaintiff, if you so choose.
However, by using a combination of call and put options one can use volatility to one's advantage.