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.
Then, I put the fastenings as I had found them, opened the door at which I had entered when I ran home last night, shut it, and ran for the misty marshes.
The space guys don't start talking until 300 kilometers because below that you're not going to put anything in orbit so we just don't talk about it.
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.
The inside receivers put their outside leg back and run a four-step flat, while the outside receivers put their outside leg back and run a four-step fade to the sideline.
"My problem is my passionate desire to put something out there that is meaningful," says Adams, 40.
Then put all the tops you like in one place, long sleeves with long sleeves, short with short, etc.
Rod Grams, R-Minn.; Tim Hutchinson, R-Ark.; and 49 co-sponsors introduced the "Putting Jobs and the American Family First Act of 1993." The bill was based largely on the comprehensive budget plan my colleagues at The Heritage Foundation released in February, in response to Clinton's well-publicized challenge to "put up" a plan of your own "or shut up" about his.
4 : the ability or power to put something into action or service <It's a blessing to have the use of one's legs.>
To resupply them, we'll require corridors that have to remain open for us to put C-17s through.
He wants the opponent to step with that leg and put weight on it.
Investing a set amount of your income each month will put you on the fast track to a stable financial future.