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What are stock options?

Put Options

A put option is a contract giving its holder the right to sell shares of the underlying stock. It is not necessary for a stock options trader to own shares of a particular stock in order to buy a put option. If an options trader purchases a single General Motors put, he or she has the right, but once again not the obligation, to sell 100 shares of General Motors stock for a particular window of time and at a certain price.

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