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.

How do put options work?

The value of a put increases as the underlying stock value decreases. Put options can be used to try to profit from downturns, or they can be used to protect a portfolio against them. Put sellers (writers) have an obligation to buy the underlying stock at the strike price. This is different from reselling a put you bought. What is a put option?

What is the difference between call options and put options?

Options contracts allow investors to buy or sell a specific security at a designated price, prior to a defined date. Call options are contracts that allow investors to buy a stock at a designated price, while put options allow investors to sell a stock at a designated price outlined in the contract. How Do Put Options Work?