Financial Markets And Services (B.Com) 5th Sem Previous Year Solved Question Paper 2022

A put option is a financial derivative contract that gives the holder the right, but not the obligation, to sell a specific underlying asset (such as a stock, bond, commodity, or index) at a predetermined price (the strike price) within a specified period of time. Put options are typically used as a form of insurance or protection against a decline in the value of the underlying asset. If the asset’s price falls below the strike price, the holder of the put option can sell the asset at the higher strike price, potentially limiting their losses.

Put options are often used by investors and traders to hedge their portfolios or to speculate on the price decline of the underlying asset. They are one of the two main types of options, the other being call options, which give the holder the right to buy an underlying asset at a specified price.