Investor Glossary-option contractInvestor Glossary-option contractInvestor Glossary-option contractInvestor Glossary-option contractInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Option Contract

The HTML to link to this page
 

An option contract, sometimes simply called an option, is an exchange-traded derivative instrument that gives the option holder the right, but not the obligation, to trade the underlying asset for a specific price. Electing to make the trade is known as exercising the option contract. If the option contract is a call option, the option holder can buy the underlying asset for the strike price. If the option contract is a put, the holder is entitled to sell the underlying upon exercise. An option contract always has an expiration date. Depending upon whether the option contract is an American option or a European option, exercise may be possible either any day up to or only on the expiration date, respectively. The counterparty to the option holder for an option contract trade is known as the option writer.



Rate this option contract definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: real GDP, inflation, phantom income, liquidity ratio, per diem, retained earnings, FICO score, Key Rate Duration, Zero Cost Collar, deferred tax, covered put, labor relations, irrevocable trust, ex-dividend date, minority interest, option premium, command economy, 1031 exchange, 1035 exchange, 401a, dividends payable, risk management, current ratio, LIBOR, balance sheet, open position, VIX, implied volatility, EBITDA, in escrow, 144a, margin rate, stock market close, quality assurance, reverse mortgage, stock split, diluted share, wholly-owned subsidiary, required rate of return, average price per share, debt service coverage, APR, annual return, ex-dividend, cancelled check, deferred revenue, FTSE, limit order, class C shares


Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use