An option giving the holder the right to sell a given stock (usually in lots of 100 shares) at a given price by a given date. For instance, you might buy a put that gives you the right to sell 100 shares of XYZ Corp. at $40 each by June 30. If XYZ falls to $30, you can exercise your option and still get the $40. If XYZ rises to $50, you do nothing and you're out only the relatively modest cost of the put. Puts can be used to hedge against a decline in the price of a stock. By buying a put, you can lock in profits in exchange for a small fee.



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