Options
Put Option — Definition & Example
A contract giving the holder the right (not obligation) to sell an asset at a specified price by a specified date.
A put option gives the buyer the right to sell the underlying at the strike price on or before expiry. The buyer pays a premium for downside protection or speculation. Puts profit when the underlying falls below the strike minus premium. Used as portfolio hedges, bearish bets, or the long leg of bear spreads. Maximum loss for a long put buyer is the premium paid.
Example
NIFTY 24300 PE bought at ₹90 premium with NIFTY at 24400. If NIFTY drops to 24100 by expiry, intrinsic value = 24300 − 24100 = ₹200. Net profit = 200 − 90 = ₹110 per lot. If NIFTY stays above 24300, the put expires worthless.
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