A put option gives its holder the right, but not the obligation to sell an asset at a predetermined price until a specific date. The seller of the put option has the obligation to buy the underlying asset if the option holder (buyer the right to sell) decides to exercise its right.
The purchase of put options for the purpose of hedging is used when price declines are anticipated in shares held. If the stock drops below that price, the investor makes money. If you drop the share price, the proceeds from the put offset in whole or in part for the loss experienced by this fall.
Losses are limited to the premium (price paid for the purchase of the put option). Profits increase as the share price drops down in the Best Forex VPS market. It is therefore convenient to buy a put option.
