Option / Option Contract
A contract that gives the owner (buyer) the right, but not the obligation, to buy or sell a particular asset (the underlying security, i.e. stock or index) at a fixed price (the strike price) for a specific period of time (until it expires). The contract also obligates the writer (seller) to meet the terms of delivery of the asset if the contract right is exercised by the owner. The amount the buyer pays the seller for the option is called the option premium.
All glossary definitions courtesy of
Glenn R. Pafumi, CFA at OptionTraderOne
Glenn R. Pafumi, CFA at OptionTraderOne
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used or construed as an indicator of future performance. The information
is not a solicitation, an offer to buy or sell, or a recommendation for
any security. OptionsBuddy.com does not guarantee the accuracy or
completeness of the information, or the suitability or potential value
of any particular investment. Request a prospectus before investing.
The term 'play' refers to placing a trade order. Returns on Investment
(ROI) are based upon the option bid and the stock last. OTM ROI's do
not take into account commission costs or loss of profit from options
being excersized.
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