Definition, Meaning & Synonyms
put-option
Financial Term
pʊt ˈɒpʃən
Definition
A put option is a financial contract that gives the owner the right, but not the obligation, to sell an underlying asset at a specified price within a specified time period.
Examples
- If you think the stock price will drop, you might buy a put option to sell it at a higher price.
- Investors use put options to limit potential losses in their portfolios.
- For example, if you own shares in a company and want protection against a price drop, purchasing a put option can be a strategic move.
Meaning
In simpler terms, a put option allows an investor to sell something (like a stock) at a certain price before a certain date, providing a way to hedge against losses or speculate on price declines.
Synonyms
- Put
- Sell option
- Sell contract
