The option buyer who expects a stock price to decline will purchase a put option.

Question

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A put option gives the buyer the right to sell a stock at a specific price (strike price) before the option expires. If the stock price declines below the strike price, the buyer can sell the stock at a higher price than the current market price, thereby profiting from the decline in the stock price. Therefore, purchasing a put option is a way for an investor to make a profit if they expect a stock price to decline.

The Option Buyer Who Expects a Stock Price to Decline