A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specific asset, like a stock, at a predetermined price within a certain time frame. Investors typically buy put options when they believe the price of the asset will decline. This allows them to sell the asset at a higher price than the market value, potentially making a profit. For example, if you own a put option for Company XYZ stock with a strike price of $50, and the stock price drops to $30, you can still sell it for $50. This strategy can help protect against losses in a declining market.