A currency put option is a financial derivative instrument that gives the holder (buyer) the right —but not the obligation — to sell the contracted currency at a set price or exchange rate (the ‘strike price’), on a predetermined expiration date. The seller of the put option must fulfill the contract if the buyer so desires Because the currency put option has value, the buyer must pay the seller a premium in exchange for the right to exercise the option. An ‘American’ put option can be exercised at any time up to the expiration date; a ‘European’ put option can be exercised only at maturity. When hedging regular foreign currency inflows and outflows, forward contracts are more widely used than currency put options. However, currency put options can be an efficient tool when contingent business events are hedged.