Option definition

Option is definition, option - Dictionary Definition : icoane-ortodoxe.com

option is definition

Option definition Option definition An option is a financial instrument that offers the holder the right — but not the obligation — to buy or sell an asset at a set price within a set time period. How do options work? There are two types of options: Calls, which give the holder the option to buy an asset at the strike price before the expiry date Puts, which give the holder the option to sell an asset at the strike price before the expiry date What is the holder?

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Options are a contract between two market participants: the writer and the holder. The writer is option is definition option provider, and the holder is the person who has the right to buy or sell the asset.

option is definition

In return for that right, the holder pays the writer a premium. What is the strike price? The strike price is the price at which the holder can buy or sell the asset, set out in the contract from the outset.

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What is the expiry date? All options have an expiry date — the point at which the option contract is no longer valid, and the holder no longer has the opportunity to buy or sell the underlying asset.

Option What is an option? An option is a financial instrument giving the right, but not the obligation, to buy or sell an asset, such as a share or currency, for a predetermined price at a fixed future date. Options are a type of derivative. Based on the underlying securities, such as stocks, option contracts can be of two major types: Call options allow traders to BUY the underlying asset at a specified price within a specified time period; Put options allow traders to SELL the underlying asset at a specified price within a specified time period.

In equity options, for instance, each contract represents shares of the stock underlying the option. Who profits from options? If you hold a large amount of a certain stock, for instance, you can mitigate the risk of your stock falling in value by buying a put option with it as the underlying asset.

Related to Option: stock optioncall optionput option Option A privilege, for which a person has paid money, that grants that person the right to purchase or sell certain commodities or certain specified Securities at any time within an agreed period for a fixed price. A right, which operates as a continuing offer, given in exchange for consideration—something of value—to purchase or lease property at an agreed price and terms within a specified time.

If the price of your stock drops beneath the strike price of your option, you can still sell at the strike price and cut your losses. Contact us.

option is definition