Put option
An option giving its buyer the right, but not the obligation, to sell an asset at a fixed strike price on or before a set expiry date.
The buyer of a put option pays a premium for the right to sell the underlying asset at the strike price. If the asset's price falls below the strike, the put gains value, because it lets the holder sell above the market price. If the price stays at or above the strike, the put expires worthless and the premium is lost. At expiry the buyer breaks even when the asset's price equals the strike minus the premium. Puts are used to speculate on falling prices, with the loss limited to the premium, or as insurance for shares an investor already owns, a strategy called a protective put.
As insurance, a put sets a floor under the value of a holding for the life of the option, but the protection has a cost, and buying it repeatedly can eat substantially into returns, especially when expected volatility is high and premiums are expensive. The seller of a put collects the premium and must buy the asset at the strike price if the option is exercised. Losses for a put seller can be large and can far exceed the premium received: the worst case is the asset becoming worthless, a loss of the strike price minus the premium on every share covered.
General education, not personal financial, tax or legal advice.