A put is a type of option contract that gives the owner the right to sell a stock at a certain fixed price within a specified timeframe.
Why It's Important
Puts are the opposite of the word we discussed last week, Call Options. Take a look at the example in that post to get a good idea of how options work. I won't belabor the point here. But, I do want you to understand that a put option becomes more valuable as the price of the underlying stock depreciates relative to the strike price.
Put options are a short position that lets you take advantage of price drops in the market. Calls are more commonly used but Puts can be another way to hedge.
There are pros and cons to trading options. As always, do your research!
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