What are Options in Finance?

What option, Call and Put Options: What Are They?

Here are all the possible meanings and translations of the word option. Princeton's WordNet 0.

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Stock Exchange A stipulated privilege, given to a party in a time contract, of demanding its fulfillment on any day within a specified limit; also, the contract giving that privelege; as, an option to buy a stock at a given price; to exercise an option. Etymology: [L.

Etymology: From option, from optio, from opto.

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Equivalent to. The new novel was optioned by the film studio, but they'll probably never decide to make a movie from it.

What is an Option? An option is a security, just like a stock or bond, and constitutes a binding contract with strictly defined terms and properties.

Freebase 5. The seller incurs a corresponding obligation to fulfill the transaction, that is to sell or buy, if the long holder elects to "exercise" the option prior to expiration.

The buyer pays a premium to the seller for this right.

What Is An Options Contract? - Options Mechanics - Options Trading For Beginners

An option which conveys the right to buy something at a specific price is called a call; an option which conveys the right to sell something at a specific price is called a put. Both are commonly traded, though in basic finance for clarity the call option is more frequently discussed, as it moves in the same direction as the underlying asset, rather than opposite, as does the put.

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Options valuation is a topic of ongoing research in academic and practical finance. For simplicity of discussion, the value of an option is commonly decomposed into two parts: The what option of these is the "intrinsic value," which is defined as the difference between the market value of the underlying and the strike price of the given option. The second part depends on a set of other factors which, through a multi-variable, non-linear interrelationship, reflect the discounted expected value of that difference at expiration.

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Although options valuation has been studied at least since the nineteenth century, the contemporary approach is based on the Black—Scholes model which was first published in Chambers 20th Century Dictionary 0. It consists in paying what option sum down for the right to put make delivery or call call for delivery a given amount of stock at a fixed future date, the price also being fixed at the time the contract is entered into.

The most joyful option was to marry as they love each other with all their heart and soul.

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