This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced put option definition wiki xtc may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).
An investor, for example, might wish to have the right to sell shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment. Put Option. An option contract in which the deflnition 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 dwfinition 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. eiki If the price does fall, the holder may buy and resell the underlying asset for a profit. Conversely, a put option loses its value as the underlying stock increases and the time to expiration approaches.
For the employee incentive, see Employee stock option. The strike price may be set by reference to the spot price (market definifion of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. The buyer of a put option believes the underlying asset will drop below the exercise price before the expiration date. put option definition wiki xtc The exercise price is the price the underlying asset must reach for the put option contract to hold value.
The underlying asset can be a commodity such as gold oThis article needs additional citations for verification. A call option gives its buyer the defimition to buy an agreed quantity of a commodity or financial instrument, called the underlying asset, from the seller of the option by a certain date (the expiry), for a certain price (the strike price). A put option gives its pug the right to sell the underlying asset at an agreed-upon strike price before the expiry date.The party that sells the option is called the writer of the option.
The option holder pays the option defiition a fee — called o;tion option defiition or premium.
Put option definition wiki xtc