How do put options work in finance? what do buyer/sellers get out of it?
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They work just the same as a call option, except the option owner chooses to sell their asset rather than buy.
Let’s say you’re selling apples on the market, and the current price is 5 cents. I offer you an option saying that tomorrow, you can sell me an apple for 6 cents if you want.
If tomorrow comes around and the market price is still 5c, you can choose to exercise your option and I have to buy an apple for 6c, 1c above market price. If, on the other hand, the market price tomorrow is 7c, you would not want to exercise your option because you’d make more money selling your apples on the market.
In this crude example the option was free, but in real life it would cost some money up front and you don’t get the fee back regardless of whether you choose to exercise the option.
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