Formal contract between an option seller (optioner) and an option buyer (optionee) which gives the optionee the right but not the obligation to sell a specific contract, financial instrument, property, or security, at a specified price (called exercise Price) on or before the option's expiration date. Inve1stors who buy put options believe the price of the underlying asset will go down and they will be able to purchase (for reselling) another option on the same asset at a price lower than the current exercise price. Opposite of call option.