# Put option buyer and seller

The graphs clearly shows the non-linear dependence of the option value to the base asset price. Puts may also be combined with other derivatives as part of more complex investment strategies, and in particular, may be useful for hedging. In the protective put strategy, put option buyer and seller investor buys enough puts to cover his holdings of the put option buyer and seller so that if a drastic downward movement of the underlying's price occurs, he has the option to sell the holdings at the strike price. The terms for exercising the option's right to sell it differ depending on option style.

In the protective put strategy, the investor buys enough puts to cover his holdings of the underlying so that if a drastic downward movement of the underlying's price occurs, he has the option to sell the holdings at the strike price. Put option buyer and seller put option is said to have intrinsic value when the underlying instrument has a spot price S below the option's strike price K. If the buyer exercises his option, the writer will buy the stock at the strike price.

If the strike is Kand at time t the value of the underlying is S tthen in an American option the buyer can exercise the put for a payout of K-S t any time until the option's maturity time T. A European put option allows the holder to exercise the put option for a short period of time right before expiration, put option buyer and seller an American put option allows exercise at any time before expiration. Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative.

If the strike is Kand at time t the value of the underlying is S tthen in put option buyer and seller American put option buyer and seller the buyer can exercise the put for a payout of K-S t any time until the option's maturity time T. Puts may also be combined with other derivatives as part of more complex investment strategies, and in particular, may be useful for hedging. A European put option allows the holder to exercise the put option for a short period of time right before expiration, while an American put option allows exercise at any time before expiration. In the protective put strategy, the investor buys enough puts to cover his holdings of the underlying so that if a drastic downward movement of the underlying's price occurs, he has the option to sell the holdings at the strike price. The put buyer either believes that the underlying asset's price will fall by the exercise date or hopes to protect a long position in it.

The terms put option buyer and seller exercising the option's right to sell it differ depending on option style. A European option can only be exercised at time T rather than any time until Tand a Bermudan option can be exercised only on specific dates listed in the terms of the contract. The writer seller of a put is long on the underlying asset and short on the put option itself.