Put Option

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Definition of 'Put Option'

When trading options on futures, a put option is the right, but not the obligation, to sell a futures contract at the option's strike price on or before the expiration date.

This definition applies equally to put options on any financially traded instrument such as stocks, bonds, and currencies (forex).

The value of a put option depends on the following factors:
  • Time to expiration
  • Strike price of option
  • Price of underlying asset
  • Interest rate
  • Volatility of the underlying asset
See also: Call Option

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