A floor price is a minimum price level below which an asset, commodity, or financial instrument will not be sold. Floor prices can be established through options strategies (such as buying put options), government support programs, or contractual agreements. These mechanisms provide downside protection while maintaining upside potential, serving as insurance against adverse price movements.

Floor price strategies are commonly used in commodity markets where producers seek protection against price declines while retaining benefits from price increases. Government agricultural support programs often establish floor prices for certain crops, while financial institutions use options-based floors to protect investment portfolios. The cost of establishing a floor must be weighed against the protection benefits.

Real-world example: A corn farmer establishes a $5.00 per bushel floor price by purchasing put options, ensuring minimum revenue protection while maintaining upside exposure if corn prices rise above $5.00 during harvest season.