Options trading
Put option
Definition
A put gives its buyer the right to sell the underlying at the strike price until expiration. Put buyers generally expect the price to fall, or use puts to protect shares they already own.
Example
Say a stock trades at $50 and you buy a put with a $48 strike for $1.20 per share, or $120 per contract, so your breakeven at expiration is $46.80. If the stock drops to $42 by expiration, the put is worth $6.00 per share, or $600, a $480 gain. If the stock closes above $48 on expiration day, the put expires worthless and you lose the $120.
Hypothetical numbers, for illustration only.
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