(redirected from putting together)
Also found in: Dictionary, Thesaurus, Legal, Encyclopedia.


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.


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.
References in periodicals archive ?
And when Johnson and his Senate colleague Tom Daschle started putting together a campaign team last year they knew they'd need the best talent they could get.
In cooperation with the Business Division of Henry Ford Community College, the Michigan-based Clothing Warehouse is conducting a business suit fashion seminar that promises to be a valuable information session for men getting ready to enter the work force and facing the necessity of putting together a business wardrobe on a budget.
We have been looking at putting together a line of storage arrays that support both Fibre Channel and iSCSI and that can scale at prices under $1,500 a terabyte," said Josef Rabinovitz, president, JMR Electronics.
We are here on these grounds putting together a system that will support these children who don't have the support they need at home,'' said Lancaster Vice Mayor Henry Hearns, a member of the center's board.
Putting Together a Budget, the newly-introduced BBBTips(TM), offers entrepreneurs information and advice on how to develop and implement a business budget.
In addition to the pressures of improving standardized test scores, funding constraints have prevented the school from putting together an annual school play, she said.
was awarded a position as a prime contractor for the United States Army's Distributed Learning Education and Training Products (DLETP) program after putting together a team of 17 innovative providers that includes the Twin Cities based Allen Interactions, developer of award-winning custom e-learning applications.
She says one of her greatest challenges is putting together the puzzle of titles and showtimes, considering compatibility and contrast, and hoping not to leave moviegoers wrung out from too many heavy dramas.
NACVA's disaster recovery experts are putting together a three-day workshop designed to help members in the DZ get back on their feet.
Drive: Mojave's big-play offense capitalized on the program's traditional power/possession game against Bishop, putting together two long time-consuming drives in the first quarter, when it allowed its opponent to run just three plays.
All of us at Toys R Us were excited when we first heard Roger Shiffman was putting together the team at Zizzle, as the business needs all of the imagination and entrepreneurial spirit available.
Here, charged with putting together a deal that would put an NFL team in the Rose Bowl, sits John Moag - an energetic, 49-year-old, cigar-chomping, gravel-throated investment banker whose language can be as salty as the sea water outside his window.