A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specific amount of an underlying asset, like a stock, at a predetermined price, known as the strike price, before a certain expiration date. Investors typically buy put options when they believe the price of the underlying asset will decline, allowing them to sell at a higher price than the market value. If the market price falls below the strike price, the holder can exercise the option, selling the asset at the higher strike price. This can help limit losses or even generate profit. If the market price stays above the strike price, the option may expire worthless, and the investor only loses the premium paid for the option.