A contract giving the holder the right to sell an underlying asset at a specified strike price before expiration. Put options increase in value as the underlying asset price decreases, making them useful for hedging downside risk or speculating on price declines.
From Middle English 'putten' meaning 'to push/place' and Latin 'optio' meaning 'choice.' The term reflects the holder's ability to 'put' or sell the asset to someone else. Put options were formalized alongside call options in early derivatives markets.
Put options are like buying insurance for your investments - you pay a premium upfront for the right to 'put' your stock to someone else at a guaranteed price, no matter how far it falls! Professional traders often buy puts as 'portfolio insurance,' and the 1987 Black Monday crash was partly caused by massive put option hedging strategies.
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