This article needs additional citations for verification. Please help improve this article by adding citations to reliable wikipedia org wiki put option. Unsourced material 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).
For the employee incentive, see Employee stock option. The strike price may be set by reference to the spot price (market price) 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. Non-English Wikipedias can also translate from the articles here. The Simple English Wikipedia is also for people with different needs, such as children, students and adults with learning difficulties, and people who are trying to learn English.
The holder will only exercise the option if it is beneficial for the holder to do so, based on the difference between the strike price and the price of the underlying asset at the maturity of the option.2.A similar option over a non-physical underlying asset.Cash settlementIn practice many options are cash-settled by a payment, if relevant, by the writer (or seller) of the option to the holder, at the maturity date of the option.There will be a payment if the underlying asset price is favourable for the option holder, compared with the strike price of the option.Options over non-physical underlying assets are always cash-settled.Foreign exchange put optionsA foreign currency wikipedia org wiki put option option is the option to sell a specifieThis is an introductory page in Options.
If you are unfamiliar with any of the terms, you can refer to the Options Glossary.An option is a financial derivative on an underlying asset, and represents the right to buy or sell the asset at a fixed price, at a fixed time. As options offer you the right to do something beneficial, they will cost money. This is explored further in Option Value, which explains the intrinsic and extrinsic value of an option.A call option gives the buyer the right to buy the asset at a certain price, hence he would benefit as the price of the underlying goes up.A put option gives the buyer the right to sell the asset at a certain price, hence he would benefit as the price of the underlying goes down.Options can also be used to hedge against an existing position in the underlying.