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. | ||
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[[category:finance]] | [[category:finance]] | ||
Revision as of 11:01, September 29, 2007
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.