The holder of a put option hopes the stock underlying his option will decline in price before the option expires.

Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell a stock at a specified price before the option expires. If the stock's price declines below this specified price, the holder can sell the stock at a higher price than the current market value, thus benefiting from the stock's decline.

The Holder of a Put Option Hopes the Stock Underlying