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An option granting the right to sell the underlying futures contract. Opposite of a call.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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While globally, respondents say they put aside a median travel budget of $2,281 per trip, those from the Mena region report they will spend substantially more.
However, if we could put aside all of these differences and put aside the sovereignty issue, we may be able to reach a consensus and try to share the resources that may be taken out of this area.
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"We should put aside disputes, work in the same direction and seek solutions through dialogue and consultation, particularly when it comes to disputes concerning sovereignty as well as maritime rights and interests," he said, while denying this means China is making an "unconditional compromise."
Richard Fearon, head of Halifax Savings, said: "Whilst women have slightly higher savings balances than men, the fact that they save almost double the amount of their earnings would suggest that saving is a greater priority to women and they manage their money more effectively to be able to do this." On a regional basis, biggest savers are in East Anglia, with an average balance of PS9,195, while people living in the northeast of England have the lowest average sum put aside, at PS7,546.
Summary: A leading representative of the private sector urged all political sides to put aside their differences and respond to Sleiman's attempts to reconvene a session of National Dialogue.
Summary: Ban Ki-moon has praised Myanmar opposition leader Aung San Suu Kyi, after her party put aside a dispute with the government.
Santander UK's bottom-line profits fell by 40% to pounds 993m after it put aside pounds 538m to deal with claims from mis-sold PPI, while underlying profits, excluding PPI, were still down 6% to pounds 1.5bn.
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A report to go before members of the Cheshire West and Chester executive next week is recommending pounds 3.9m be put aside to offset 140 redundancies.
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Pat seems willing to put aside their differences and help Peggy out in her time of need, but as local lothario Harvey continues his efforts to date them both, could it drive a wedge between them or just serve to bring the two women closer together?

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