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Investing & the Stock Market vocabulary · Derivatives

Put option

Meaning in investing & the stock market, with examples

/ˈpʊt ˌɑːpʃn/nounCommon term

In investing & the stock market, put option means: An option that gives the buyer the right to sell an asset at a fixed price, the strike price, until or on a set date. Its value usually rises when the asset's price falls.

In Turkish: satım opsiyonu, put opsiyonu

How it is used

Investors buy puts to protect a portfolio against a fall, in the same way as buying insurance, or to bet on a decline. Market reports watch the put-call ratio as a sign of fear. In speech people say 'puts': 'demand for puts jumped'.

Example sentences

  1. The fund bought put options on the index to protect itself before the election.

  2. If the stock stays above the strike, the put option will expire worthless.

Common collocations

  • buy a put option
  • protective put
  • put option premium
  • put-call ratio
  • call optionAn option that gives the buyer the right to buy an asset at a fixed price, the strike price, until or on a set date. Its value usually rises when the asset's price rises.
  • optionA contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a fixed price before or on a certain date, in exchange for a payment called the premium.
  • hedgeTo reduce the risk of losing money on an investment or business exposure by taking an opposite position, often with derivatives such as futures or options.
  • derivativeA financial contract whose value depends on the price of something else, such as a share, an index, a currency, an interest rate or a commodity.

More terms: Derivatives

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This page explains English vocabulary for learners. It is not financial advice.