Options
Options Meaning:
In financial derivatives terminology, the term Options refers to a class of derivatives in which the right, but not the obligation, to buy or sell an underlying asset is conferred to the option buyer by the seller.
In financial derivatives terminology, the term Options refers to a class of derivatives in which the right, but not the obligation, to buy or sell an underlying asset is conferred to the option buyer by the seller.
For example, Call Options confer upon the buyer the right to buy the underlying asset from the seller typically at a particular price, commonly known as the strike price, and within a specified time frame. Put Options, on the other hand, confer upon the buyer the right to sell the underlying asset to the option seller, again at a particular price and within a specified time frame. In neither case will the Options’ buyer be obligated to buy or sell the underlying asset, and they will generally only choose to do so when it is to their financial advantage. Options are especially popular as hedging vehicles and can assist portfolio managers in modifying their investment risk profiles.