• An option is the right to buy (Call Option) or to sell (Put Option) the underlying asset at a fixed price during a fixed time period.


Follow this link for all the terms related to option.

 Embedded terms in definition
Call option
Put option
Underlying asset
 Referenced Terms
 American option: An option that may be exercised at any time up to and including the expiration date. Related: European optionAn option that may be exercised at any time during the life of the option. Stock Options that trade in U.S. option exchanges, such as the CBOE, are of American types. Index options are of either American (option on S&P100 index, called OEX) or European types (option on S&P500 index, called SPX). See call and put options.

 American style option: Is an option which permits exercise prior to the indicated expiration date. This compares to an European Style option which can only be exercised on the expiration date.An option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded Options are American style.

 Assignment: The receipt of an exercise notice by an Options writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.Is the action for the seller of the option of acquiring the opposite position when an option is exercised. When a put is exercised, the writer receives a long position in securities or a long futures contract. When a call is exercised, the writer receives a short position in the securities or a short futures contract.A voluntary liquidation procedure by which a firm's creditors pass the power to liquidate the firm's assets to an adjustment bureau, a trade association, or a third party, which is designated the assignee.

 Back spread or backspread: Is a position where you buy more Options relative to the number of sold options. This strategy typically is placed in the expectation of a dramatic move. Compare to Ratio Spread.

 Barrier options: Contracts with trigger points that, when crossed, automatically generate buying or selling of other Options. These are very exotic options.See knock-in and knock-out Options.

 Related Terms

<< Option writer Options clearing corporation >>

Teaching Children the Financial Facts of Life: Showing the importance of saving, spending wisely and sharing with others More...

The future belongs to those who believe in the beauty of their dreams. - Eleanor Roosevelt


Copyright 2009-2018 GVC. All rights reserved.