Put Option

A contract between buyer and seller which gives the buyer the right, but not the obligation, to sell a specified amount of gold (or other commodity) at a pre-determined price (strike price) on or before a specified date (expiry date). The seller, or grantor, of the put option is obliged to take delivery if the option is in-the-money and the buyer wishes to exercise the option and, for that, charges a premium. Usually abbreviated to ‘put’ and is the opposite of call option.