What Does "selling Put Options" Mean?


Quick Answer

Selling a put option is a type of securities contract that permits the buyer to sell a given quantity of a security at a particular price until the contract expires. The contract obliges the seller to buy but does not require the buyer to sell, says The Options Guide.

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What Does "selling Put Options" Mean?
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Full Answer

In return for undertaking the risk of the obligation, the seller of the put option receives a premium from the buyer. As a strategy, sellers make money by collecting these premiums. Given that buyers of puts tend to be taking a bearish stance on the underlying investment, the seller of a put is more likely to approach the same investment with a bullish or neutral stance, reports optionMONSTER.

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