puts

The type of option that gives the purchaser the right but not the obligation to sell a security for a specified price at a certain time. It's basically a bet that the stock price will drop. These are used when an investor is trying either to speculate on the downward movement of a stock or protect the gains from a long position that has generated strong returns but may be headed for a downturn. If you write or sell a put, you incur the potential obligation to buy a stock.

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