Investing Basics

What Is a Put Option?

A put option is a contract that gives its buyer the right, but not the obligation, to sell an asset at a set price (the strike price) on or before an expiration date. The buyer pays a premium and benefits if the asset’s price falls below the strike. Puts are used both to speculate and to protect existing holdings.

Example

A put with a strike of 50, bought for a premium of 3, breaks even at 47 at expiration; above 50 it expires worthless.

Protective Puts

Owners of a stock sometimes buy puts to limit how much they could lose if the price falls, similar to insurance.

🧮 Calculate It Yourself

Put Put Option into practice with these free calculators — no sign-up, nothing stored.

💹 Stock Profit Calculator Profit or loss on a stock trade after commissions, return percentage, and break-even price. Calculate → 📊 Break-Even Point Calculator How many units do you need to sell before your side business profits? Calculate →

🔗 Related Terms

Call Option Short Selling Volatility Stop-Loss Order

More Investing Basics Terms

📖 Browse all glossary terms or explore all free calculators.

Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.