Put option

A put option carries the right but not the duty to sell an underlying asset (e.g. shares or commodities) within a contractually determined period and at a predetermined price.

Put options can generate sizeable profits when prices are falling.

Put options on shares involve more risk than investment in the shares themselves because any changes in the price of the underlying have a disproportional impact on the price of the option (leverage effect). Investors often fail to make use of their right to deliver the underlying asset, preferring to sell the option before the last day of trading on the stock exchange.

See alsoCall optionEurexFutures market