Advanced English Dialogue for Business – Put to seller

Listen to a Business English Dialogue About Put to seller

Hannah: Hi Jason, have you ever heard of “put to seller” in finance?

Jason: No, I haven’t. What does it mean?

Hannah: “Put to seller” is an option contract that gives the holder the right to sell a specified asset at a predetermined price to the seller of the option.

Jason: Oh, I see. How does “put to seller” benefit the holder?

Hannah: “Put to seller” provides downside protection to the holder, allowing them to sell the asset at the predetermined price even if the market price falls below that level.

Jason: That sounds useful. Are there any risks for the seller?

Hannah: Yes, the seller of the option bears the risk of having to purchase the asset at the predetermined price, even if the market price is lower, potentially resulting in a loss.

Jason: I understand. How is the price of a “put to seller” option determined?

Hannah: The price, or premium, of a “put to seller” option is influenced by factors such as the underlying asset’s price, volatility, time to expiration, and prevailing interest rates.

Jason: Got it. Can “put to seller” options be traded on exchanges?

Hannah: Yes, “put to seller” options can be traded on options exchanges, providing investors with liquidity and the ability to enter and exit positions more easily.

Jason: Thanks for explaining, Hannah. “Put to seller” options seem like a useful tool for managing risk in the financial markets.

Hannah: Absolutely, Jason. They offer both buyers and sellers a way to hedge against adverse price movements and protect their investments.