definitions Option


A contract that permits one party to buy from (or sell to) the other party something at a pre-specified price during a pre-specified period of time, leaving the choice of whether to do this or not (whether to exercise the option) up to the first party, which buys the option. Options exist for many assets, including foreign exchange. It is a financial instrument that gives the holder the right-but not obligation-to sell (put) or buy (call) another financial instrument at a set price and expiration date.