Put Option

A put option is a contract that gives you the right to sell a stock at a set price by a certain date. Think of it as insurance: you're betting the stock price will drop, and the put lets you sell at a higher price than the market offers. You encounter puts when investors want to protect gains or profit from falling prices. They matter because they're a way to hedge risk (reduce potential losses) without selling your shares. For example, if you own shares of TechCorp trading at $100, you might buy a put option allowing you to sell at $95 in three months—protecting yourself if the price crashes. You pay upfront for this right, called the premium, which is your maximum loss if the stock rises instead.