Options

Discipline: Economics

Options, or option contracts, are contracts that allow their holders to buy or sell a certain security or currency on a future date, which is called the final settlement date, or the delivery date.

Unlike an future contract, an options contract does not have to be exercised. In other words, it is optional for the holder of the options contract to not buy or sell the security or currency in question.

The right to buy a specified amount of security on a future date is called a call option, while the right to sell a specified amount of security on a future date put option.

Also see:

· derivatives
· futures
· stock options
· swaps

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