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Put Option
An option contract granting the right to sell an asset at a set price.
A put option grants its buyer the right, but not the obligation, to sell an underlying asset at a predetermined price (the strike price) before or at expiry — generally purchased by someone expecting the asset's price to fall, or seeking downside protection.
The option's value generally increases as the underlying asset's price falls below the strike price.
Examples
- A put option becomes more valuable as the underlying asset's price falls below its strike price.
- Buying a put option can be used as a form of downside protection on an existing holding.