Put Options - Enforcement And Claiming Damages & Indemnity

An Introduction to Put Options

Options are instruments which derive their validity from an underlying asset. Contracts which have an options clause provide the holder of the option ("Option Holder") the opportunity to buy or sell the underlying asset at an agreed upon price and date. While an options clause in a contract confers a right on the Option Holder to buy or sell its assets, it simultaneously imposes the reverse obligation on the other party to the option contract ("Option Writer") to compulsorily sell or buy the assets of the Option Holder at the pre-determined rate. A put option gives the Option Holder the right to "put" the asset back into the market, i.e. sell the asset at a pre-set price within a specific duration of time to the Option Writer.