Put Option is:
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A. B. C. D.C
A Put Option is a financial contract that gives the holder (buyer) the right, but not the obligation, to sell an underlying asset (such as a stock, commodity, currency, or bond) at a specified price (strike price) within a certain time frame. In other words, it is an option to sell an asset.
Answer (C) is correct: "An instrument that grants the holder the right but not the obligations to sell the underlying asset at the specified strike price."
Put options are commonly used as a hedging strategy to protect against downside risk or to speculate on the price movement of an asset. If the price of the underlying asset declines below the strike price, the holder of the put option can sell the asset at the higher strike price, resulting in a profit. If the price of the asset remains above the strike price, the holder can let the option expire worthless and only lose the premium paid for the option.
On the other hand, a Call Option is a financial contract that gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a certain time frame. In this case, the holder has the option to buy the asset at the lower strike price and profit if the asset price increases above the strike price.
Option contracts are used extensively in derivatives trading, and they can be used to manage risk or to speculate on future price movements. It's important to note that options involve risks and are not suitable for all investors. It is recommended to consult a professional financial advisor before engaging in options trading.