An article in the New York Times with the headline For Investors, Portfolio Insurance Against Market Declines,

Question:

An article in the New York Times with the headline “For Investors, ‘Portfolio Insurance’ Against Market Declines,” observes: “You can, for example, buy ‘put’ options on a single stock or an entire index.”
a. How does buying a put option provide insurance against a fall in stock prices?
b. Briefly compare the pros and cons of buying a put option versus selling stocks if you are worried that stock prices might decline.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...