Put options allow investors to make profits when share prices are falling.

Question

Quizplus · Accepted Answer

Put options give the owner the right, but not the obligation, to sell a stock at a predetermined price (strike price) within a specified period of time. If the share price falls below the strike price, the owner of the put option could buy shares at the lower market price and sell them at the higher strike price, making a profit on the difference. Therefore, put options allow investors to make profits when share prices are falling.

Put Options Allow Investors to Make Profits When Share Prices