Put option


 

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Put option

An option which gives the holder the right but not the obligation to sell shares (or other financial instrument) at a fixed price on or before a given date.Every put option has an exercise price. This is the price at which the holder is entitled to sell the shares to the option writer. If the price of the share falls below the exercise price, the option is said to be 'in the money' and to have an intrinsic value which is equal to the difference between the two.For instance, an option which entitles the holder to sell shares in XYZ at 80p has an intrinsic value of 8p if the price of XYZ's shares falls to 72p.If the price of XYZ's shares rose to 90p, on the other hand, the put option would have no intrinsic value because it would not be in the holder's interests to sell the shares at 80p. The only value which the put option would then have would be its time value.

Put option

This security gives investors the right to sell (or put) a fixed number of shares at a fixed price within a given period. An investor, for example, might wish to have the right to sell shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.



Put option

Similar Matches

Quality option

Quality option

Gives the seller choice of deliverables in Treasury bond and Treasury note futures contracts. Also called the swap option. Related: Cheapest to deliver issue.


Foreign currency option

Foreign currency option

An option that conveys the right (but not the obligation) to buy or sell a specified amount of foreign currency at a specified price within a specified time period.


Qualifying stock option

Qualifying stock option

A benefit granted by a corporation that allows employees to purchase shares at a discount price.


Put an option

Put an option

To exercise a put option.


Class of Options

Class of Options

Option contracts of the smae type (call or put) and Style (American, European or Capped) that cover the same underlying security.


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