Index put options definition
This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2015) ( Learn how and when to remove this template message)In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified defknition (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).
See also traded option. They are called binary options for this very reason. More specifically, a put option is the right to SELL 100 shares of a stock or an index at a certain price by a certain date. For stock options, the amount is usually 100 shares. Each option has a buyer, called the holder, and a seller, known as the writer. Defknition the option contract is exercised, the writer is responsible for fulfilling the terms of the contract by delivering the shares to the appropriate party.
In the case of a security that cannot be delivered such as an index, the contract is settled in cash. For the holder, the potential loss is limited to the price paid to acquire the option. When an option is not exercised, it expires. No shares change hands and the money spent to purchase the defknition is lost. For the buyer, the upside is unlimited.
It is colloquially referred to as the fear index or the fear gauge.The Definiion concept formulates a theoretical expectation of stock market volatility in the near future. The buyer of a put option believes the underlying asset will drop below the exercise price before the expiration date. The exercise price is the price the underlying asset must reach for the put option contract to hold value.
Place is more formal than put, and is mainly used in writing.If you place something somewhere, index put options definition put it there. You often use place to say that someone puts something somewhere neatly or carefully. I put her suitcase on the table.Put has several other index put options definition.