A put option in finance allows you to sell a share of stock at a given price in the future. There are different types of put options. Let us consider the European put option which allows you to sell a share of stock at a given price called the exercise price, at a particular point in time after the purchase of the European put option. For example, suppose you purchase a six-month European put option for a share of stock with an exercise price of $25. If six months later, the stock price per share is $26 or more, the option has no value. If in six months the stock price is lower than $26 per share, then you can purchase the stock and immediately sell it at the higher exercise price of $26. If for example, the price per share in six months is $22.50, you can purchase a share of the stock for $22.50 and then use the put option to immediately sell the share for $26. Your profit would he the difference, $26- $22.50 = $3.50 per share less the cost of the option. If you paid $1.00 per put option, then you profit would he $350-$100 = $2.50 per share