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put option
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put option

  the option to sell a given stock (or stock index or commodity future) at a given price before a given date
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Strongly Associated with:   call option
A put option is often just called a "put".

For example, if you purchased a put on Google stock at the current price for one year and the stock price fell (by more than the cost of the put), then you would make money. The other party to the put would have to buy Google stock from you at the agreed to price even though the price went down in the interim.

If the stock price did not fall, you would not execute the put, so no stock would trade hands, but you would have lost the amount of money you paid for the put.

Exact specifications may differ depending upon the style of put. For example, a typical American put can be exercised at any time during its life, but a typical European put can be exercised only for a short period before the put’s expiration.

A "naked" or "uncovered" put is one where the person who promised to sell does not own the security they promised to sell. Alternatively, puts can be used to limit losses on securities one already owns. For example, if you owned Google stock and thought it would increase, but didn’t want to risk it’s falling too far, you might hold onto the stock, but purchase a put at 75% of its current value.

A put option is the opposite of  the more commonly know "call option" which is often just called a "call" or an "option" (i.e., an option to buy at a given price).
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Associated words [difficulty]:   put option , stock option [9]
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Most commonly used in these subjects:   Personal Finance, Business, Sports
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