Glossary · from the DESK dictionary
Put Option
The right (but not the obligation) to sell an underlying asset at a fixed price.
In plain words
With a put, you're betting a price will fall, or you're hedging an existing position against losses.
In more detail
A put gives the buyer the right to sell the underlying at the strike price by or on the expiration date. Puts are used both speculatively (betting on falling prices) and for hedging existing long positions.
Example
A put on Tesla with a $250 strike gives you the right to sell 100 shares at $250 each, even if the price has dropped sharply.
What it means for traders
A key tool for hedging portfolios (protective put) and for bearish speculation without the theoretically unlimited risk of a short sale.
Common pitfalls
Maximum loss for the buyer is the premium; for the uncovered seller, it's substantial, since the underlying can theoretically fall to zero.
Related terms
At-the-Money (ATM) · Bear Put Spread · Call Option · Jade Lizard · Protective Put
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.