Definition Definition


Option is the right of choice or election of a buyer or seller. It is a contract that gives its holder the right to buy or sell an asset at some predetermined price within a specified period of time.

An option contract gives its holder the right-but not the obligation to conduct a transaction involving an underlying security or commodity at a predetermine future date and at a predetermined future date and at a predetermined future price.

In law dictionary,” Option is the right to compel a future transfer of property.”

In wikepedia,” An option is a contract written by a seller that conveys to the buyer the right but not the obligation to buy or to sell a particular asset, such as a particular piece of property, or shares of stock”

Geocities said,” An option contract describes a sale of a security or commodity that will occur at a specified later date and at a specified price if, and only if, one party of the contract either the prospective buyer or the prospective seller wants to go ahead with the sale.”

Ross, Westerfield & Jaffe said in their book of ‘corporate finance’,” An option is a contract giving its owner the right to buy or sell an asset at a fixed price on or before a given date”

L.J. Gitman said,” An option can be viewed as an instrument that provides its holder with an opportunity to purchase on sell a specified asset at a stated price on or before a set expiration date.”

In Montrial Exchange Referance Maueal,” An option is an agreement between two parties for a specified time period that gives the holder, the right, not the obligation, to buy or sell a specified member of shares, usually a lot of 100 shares, at a predetermined price.”


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