Put Option
The right to sell 100 shares at a set strike price before expiration.
What is Put Option?
A contract giving the buyer the right to sell the underlying at the strike. Used to hedge a long position or to speculate on a decline. Buying a put is a defined-risk way to express a bearish view, unlike shorting.
Put Option: a worked example
Own 100 shares at $50 and buy a $45 put for $1.50 - a floor at $45 for $150, expiring on a set date.
More terms in Securities & Instruments
Common Stock
An ownership share in a company, with voting rights and last claim on assets.
Preferred Stock
Equity with a fixed dividend and priority over common, usually without votes.
Bond
A loan to an issuer that pays interest and returns principal at maturity.
Coupon Rate
The bond's stated annual interest as a percentage of par.
Yield to Maturity (YTM)
The total annualized return if you buy today and hold to maturity.
Par Value (Face Value)
The principal repaid at maturity, conventionally $1,000 per bond.
Duration
A bond's price sensitivity to a 1% change in interest rates.
Credit Rating
An agency's assessment of an issuer's likelihood of default.