You find that an investor purchases a put option on shares of Company Z stock.What is the most likely reason that an investor would make such a purchase?

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An investor purchasing a put option on shares of Company Z stock indicates that the investor believes that Company Z is an overvalued company and that its stock price is likely to decrease in the future. A put option gives the holder the right, but not the obligation, to sell a specific number of shares at a specific price (strike price) before the expiration date. If the stock price drops below the strike price, the holder can exercise the option and sell the shares at a profit. Therefore, buying a put option is a common strategy used by investors to protect themselves from potential losses due to a decline in the stock price.

You Find That an Investor Purchases a Put Option on Shares