👉 Puts engineering is a fundamental concept in options pricing and risk management, focusing on the creation of put options. A put option gives the holder the right to sell an underlying asset at a predetermined strike price within a specified time frame. Puts engineering involves calculating the theoretical value of these options by considering factors such as the underlying asset's current price, its volatility, time to expiration, and the risk-free interest rate. The process typically uses mathematical models like the Black-Scholes model to estimate the intrinsic value of a put option, which is the difference between the current asset price and the strike price, adjusted for time decay and volatility. This engineering is crucial for traders and risk managers to price options accurately, manage exposure, and make informed decisions in financial markets.
