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A stipulated privilege of buying or selling a stated property, security, or commodity at a given price (strike price) within a specified time (for an American-style option, at any time prior to or on the expiration date). A securities option is a negotiable contract in which the seller (writer), for a certain sum of money called the option premium, gives the buyer the right to demand within a specified time the purchase (call) or sale (put) by the option seller of a specified number of bonds, currency units, index units, or shares of stock, at a fixed price or rate, called the strike price or rate. Many options are settled for cash equal to the difference between spot value and the aggregate strike price rather than by delivery of the underlying. In the United States and many other countries, stock options are written for units of 100 shares. Other units of underlying coverage are standard in other option markets. Options are ordinarily issued for periods of less than one year, but longer term options are increasingly common. See Call Option (diagrams), Combination Option, Commodity Option, Expiration Date (1), Premium, Put Option (diagram), Terms of an Option Contract, Option Contract.
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