Definition of option contract 7 year


Definition of option contract 7 year


The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time. For stock options, the amount is usually 100 shares. Each option contract has a buyer, called the holder, and a seller, known as the writer. If the option contract is exercised, the writer is responsible for fulfilling the terms of the contract by delivering the shares to the appropriate party.

In the case of a security that cannot be delivered such as an index, the contract is settled in cash. For the holder, definition of option contract 7 year potential loss is limited to the price paid to acquire the option. When an option is not exercised, it expires. No shares change hands and the money spent to purchase the option is lost.

For the buyer, the upside is unlimited. With an option contact, the offeror is not permitted to revoke the offer because with the payment, he is bargaining away his right to revoke the offer. See also traded option. A potential buyer has to give the seller some payment in exchange. By accepting a certain amount of money in exchange for this option, the seller has bargained away their right to revoke the offer.




Of contract definition 7 year option

Definition of option contract 7 year


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