put option
/pʊt ˈɒpʃən/
a contract giving the buyer the right, but not obligation, to sell shares at a set price before expiration
put option in a sentence
“She bought put options as insurance against a decline in her portfolio.”
Origin of put option
From the right to put (force delivery of) the underlying asset onto the seller
Related Words
strike price
the predetermined price at which an option holder can buy or sell the underlying asset
premium
the price paid to purchase an options contract
implied volatility
the market's forecast of likely future price movement, derived from current option prices
delta
the rate of change in an option's price relative to a $1 move in the underlying asset
theta
the rate at which an option loses value each day due to the passage of time; time decay
hedge
an investment made to reduce the risk of adverse price movements in an asset