currency put option

Definition

Forex

  • An option to sell a currency at a stated exchange rate prior to its expiration on a predetermined date. A put option is purchased when the price of the underlying security is expected to decline which will increase the value of the option so an investor can profit without having to hold the underlying security. It is often used as insurance to protect a long position against the possibility of a decrease in the value of the underlying security.
http://www.dictionarycentral.com/definition/currency-put-option.html