What is a put option & how does it work?

A put option gives you the right, but not the obligation, to sell a stock at a specific price (known as the strike price) by a specific time — at the option’s expiration. For this right, the put buyer pays the seller a sum of money called a premium.

What does it mean to write a put?

Writing puts means that the investor is selling the contract and earning the premium for it. They are banking that the stock price won't trade below the exercise price, causing the option to not be exercised. This is a way for some investors to generate income in their portfolio.

What does put mean in English?

The irregular verb put means ‘move something into a particular place’. The past simple form is put and the -ed form is put: … put it there! She put her arm around him. Put your clothes in the closet. When you set the table, put the soup spoons next to the knives. She put her coffee cup on the table.