put writer

"So somebody actually pays you money just for promising to buy shares later? Sounds like free money." "It is free money until the day you actually have to buy."

That was Tomiwa explaining to his cousin why he kept talking about being a put writer on some American tech stock he liked. His cousin, watching from Lagos and trying to understand what all these option words meant, could not see how anyone gets paid for a promise.

Here is the plain version. When you write a put, you are telling the market, I will buy this stock from you at ₦2,000 a share if you want to sell it to me before a certain date. For making that promise, someone pays you a fee right now, called a premium. If the share price stays above ₦2,000, the other person will not bother selling to you at that price, your promise expires unused, and you simply keep the fee. If the price falls below ₦2,000, they can make you buy at ₦2,000 even though the market says it is now worth less. You still keep the fee, but you are now holding shares worth less than you paid.

Think of a Nigerian version. A friend in London wants to guarantee she can sell her small stake in a company at a fixed price if things go bad. She finds someone willing to promise to buy at that price, and pays that person a small fee for the comfort. That person is the put writer. They are being paid to carry risk that someone else wants to get rid of.

People become put writers for two reasons. Some genuinely want to own the stock and are happy to be forced to buy it cheaper than today's price, while collecting a fee along the way. Others are simply selling insurance for income and hoping the bad day never comes.

It rewards patience and punishes carelessness. The fee feels like a gift until the market reminds you why you were paid in the first place.