Assume an option contract is for 1 underlying share. A put option on IBM stock has a strike price of $122. The holder of this put option exercises the option today when the price of IBM stock is $120. This means that the holder of the put option_ buys an IBM share at the price of $125 O sells the option contract today for a price of $120 O sells an IBM share today at the price of $122 sells an IBM share today at the price of $120

A put option is a derivative contract which gives right but not an obligation to the option buyer to sell the underlying asset which can be a stock or any commodity at a particular price known as strike price or on before the expiration date. The put option buyer will exercise this right when the price of underlying asset falls. The put option buyer has to pay option premium to buy the contract.