Börsenlexikon: Put option

A put option is an option under which the buyer (long position) has the right, but not the obligation, to sell a specified underlying at a predetermined price (strike price) in a predetermined quantity within a specified period (American options) or on a specified date (European options). He will only exercise his right if the price of the underlying is below the strike price. The seller of the put option (short position) is obliged to take over the underlying asset; for this obligation he receives the option premium from the buyer of the option.