What is a Put Option?

A put option (sometimes simply called a "put") is a financial contract between two parties, the seller (writer) and the buyer of the option. The put allows its buyer the right but not the obligation to sell a commodity or financial instrument (the underlying instrument) to the writer (seller) of the option at a certain time for a certain price (Strike Price). The writer has the obligation to purchase the underlying asset at that strike price, if the buyer exercises the option.