What do you call an option that gives you the right to sell beneath a specified price?

The option that gives you the right to sell an underlying asset at or below a specified price is called a put option. This financial instrument allows the holder to benefit from declines in the asset's value. When an investor anticipates that the price of the asset will fall, they may purchase a put option as a form of insurance or to profit from that expected decline.

In financial terms, the specified price at which you can sell the underlying asset is known as the strike price. If the market price of the asset drops below the strike price, the investor can sell the asset at the higher strike price, effectively limiting their losses or capitalizing on the decrease in market value. This characteristic is what differentiates put options from other types of options, such as call options, which give the right to buy assets instead. Understanding the function of put options is crucial for effective personal financial management and for making informed investment decisions.