What is a 'Put' option in finance?

A 'Put' option in finance refers to a financial contract that gives the holder the right to sell an underlying asset at a specified price, known as the strike price, within a set time period. This type of option is particularly valuable when the holder anticipates a decline in the price of the underlying asset. By having the ability to sell at the predetermined strike price, the holder can limit potential losses if the market price falls below this level.

In this context, a 'Put' option serves as a form of insurance against a drop in asset value, allowing investors to hedge their positions or speculate on declines in market prices. This characteristic is what distinguishes 'Put' options from other types of options, such as 'Call' options, which provide the right to buy the underlying asset instead.

The other choices describe different aspects of options and contracts but do not accurately define what a 'Put' option is. Therefore, the choice that identifies the right to sell an underlying asset at an agreed price aligns perfectly with the definition and purpose of a 'Put' option.