Put Option
An option giving its buyer the right to sell the underlying at the strike price on or before expiry.
Formula
Payoff at expiry for the buyer = max(Strike - Spot, 0) - Premium Paid
Unit
₹
In depth
A put is the standard instrument for protecting a holding, because its value rises as the underlying falls, capping the loss on the position it hedges. Buying a put is not the same as short selling: the put's loss is limited to the premium while a short position's loss is unbounded, and the put costs money to hold while a short does not. Like a call, a put buyer needs the move to be large enough and soon enough to overcome the premium. Puts on indices are the usual portfolio hedge in India because single-stock puts are frequently illiquid.
Worked example
A 24,000 put bought for 165 breaks even at 23,835. At an expiry of 23,900 the put is worth 100, so the holder loses 65 x 75 = ₹4,875 even though the index fell 100 points.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Put Option” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.