Options & Bonds
What is Put Option?
A contract giving you the right to sell a stock at a set price
Full Explanation
A put option gives you the right to sell 100 shares at the strike price before expiration. If the stock falls below the strike, your put gains value. Puts are often used as insurance (hedges) against a stock you own.
Real-World Example
Own Apple stock at $175. Buy a $160 put. If AAPL crashes to $120, your put is worth at least $40 per share.
Pro Tip
Buying puts as portfolio insurance is called "protective puts" — a legitimate risk management strategy.
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