What Is A Put Option?
Answers
Q.What Is A Put Option?
When you buy a put option, you get the right to sell stock at a certain fixed price within a specified time frame. Most put options allow you to sell 100 shares of stock to the investor who sells you the put option, and you have to make a decision about what to do before the option expires. If the price of the stock on the open market falls below what's called the strike price -- the specified price in the put option -- then you'll usually want to exercise the option and sell the stock at the higher strike price. Conversely, if the market price of the stock is still above the strike price of the put option, then you'll simply let it expire, and if you want to sell the stock, you'll do it on the open market where you'll get a higher price.
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