Difference between revisions of "Option"
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(New page: An option gives its owner the right, but not the obligation, to trade an underlying financial asset or commodity. Options differ from futures in that the owner of an option need not exer...) |
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| − | An option gives its owner the right, but not the obligation, to trade an underlying financial asset or commodity. | + | An '''option''' gives its owner the right, but not the obligation, to trade an underlying financial asset or commodity. Options are a common form of executive compensation in company [[stock]]. |
Options differ from futures in that the owner of an option need not exercise it by purchasing the underlying contract, while the owner of a future is obligated to make the purchase. | Options differ from futures in that the owner of an option need not exercise it by purchasing the underlying contract, while the owner of a future is obligated to make the purchase. | ||
| − | [[ | + | |
| + | There are two kinds of options: '''calls''' and '''puts'''. A call is the right to buy an underlying instrument, and a put is the right to sell it. | ||
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| + | [[Category:Finance]] | ||
Latest revision as of 17:01, July 13, 2016
An option gives its owner the right, but not the obligation, to trade an underlying financial asset or commodity. Options are a common form of executive compensation in company stock.
Options differ from futures in that the owner of an option need not exercise it by purchasing the underlying contract, while the owner of a future is obligated to make the purchase.
There are two kinds of options: calls and puts. A call is the right to buy an underlying instrument, and a put is the right to sell it.