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According to
investopedia.com a
put options is
"an option contract
giving the owner the
right, but not the
obligation, to sell
a specified amount
of an
underlying asset at
a set price within a
specified time. The
buyer of a put
option estimates
that the underlying
asset will drop
below the exercise
price before the
expiration date."
A put option
is purchased when
the buying trader
expects the
underlying price to
lose some of its
current dollar
value. The buyer of
the put option
would acquire
profits by selling
the option or
exercising it if the
price of the
underlying stock
actually does fall.
The opposite is the
case for an
individual who sells
a put option. |
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