Understanding Put Options in Stocks: A Powerful Tool for Investors
In the world of stock trading, understanding the different investment vehicles and strategies is important for investors who want to manage risk and maximize returns. One such tool is the put option. In this blog post, we discuss the concept of a stock put option, how it works, and how it can benefit investors.
What is a put option? A put option is a financial contract that gives the holder the right, but not the obligation, to sell a certain number of shares at a predetermined price (known as the strike price) within a certain period of time. It provides a form of insurance against a possible decline in the price of the underlying stock.