This is a derivative that gives the buyer a degree of protection against falling prices.

For example you might buy a “put” option on the FTSE 100 with a strike price of 6,000 points. You will pay an upfront premium for this which is non-refundable. If the FTSE starts falling your option will pay out the further below 6,000 it falls based on the gap between 6,000 and its closing level. That could be useful to compensate you for the corresponding fall in the value of your FTSE portfolio. If on the other hand the market rises your portfolio will benefit and you can abandon the option albeit you have still lost the premium. Similar contracts are available called “call” options based on markets rising.

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