A put option is a contract that grants the buyer the right, but not the obligation, to sell an asset at a predetermined price on a predetermined date. If the asset's market price falls, the value of a put option rises.

If the option is exercised by the buyer, also known as the holder, the seller, also known as the writer, is obligated to purchase the underlying asset at the agreed-upon price, known as the strike price. The writer is compensated for accepting the risks associated with taking on the obligation to buy.

A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specified asset at a predetermined price within a specified timeframe. This derivative is commonly used in financial markets to hedge against potential price declines or to speculate on a security's downward movement. By purchasing a put option, an investor can protect themselves from losses in the underlying asset's value. If the asset's price falls below the predetermined "strike price," the put option becomes profitable. Put options provide a valuable risk management tool for investors navigating volatile markets.