A put option acts like insurance to protect a floor selling price for a commodity.

Name: A put option acts like insurance to protect a floor selling price for a commodity.
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Question

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A put option gives the holder the right, but not the obligation, to sell a commodity at a specified price (the strike price) before the option expires, effectively setting a minimum selling price and acting as a form of insurance against price declines.

A Put Option Acts Like Insurance to Protect a Floor