- option
- an agreement, often for a consideration, which permits the purchase or sale of something within a stipulated time, in accordance with the terms of the agreement. For example, a right by a tenant to take up a further lease of premises, usually under conditions outlined in the original lease. Glossary of Business Terms————A contract that conveys the right, but not the obligation, to buy or sell a particular item at a certain price for a limited time. Only the seller of the option is obligated to perform. Chicago Board of Trade glossary————(1) A contract that gives its holder the right, but not the obligation, to buy or sell an underling security, commodity, or currency before a certain date. Options are often used in hedging. Put options give the holder the right to sell the underlying security, commodity, or currency at the strike price. Call options give the holder the right to buy the underlying security, commodity or currency at the strike price.(2) A provision in a financial contract that gives one party to the contract one or more rights to change the maturity, the principal amount, the interest rate, or other contract term. In loans, the most common form of option risk arises from a borrower's right to prepay. In securities, the most common form of option risk arises from an issuer's right to call the security.See embedded option. American Banker Glossary————Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date. investors, not companies, issue options. Buyers of call options bet that a stock will be worth more than the price set by the option (the strike price), plus the price they pay for the option itself. Buyers of put options bet that the stock's price will drop below the price set by the option. An option is part of a class of securities called derivatives, which means these securities derive their value from the worth of an underlying investment. Bloomberg Financial Dictionary————The right, but not the obligation, to sell or buy the underlying ( in this case, a futures contract) at a specified price on or before a certain expiration date.There are two types of options: call options and put options. Each offers an opportunity to take advantage of futures price moves without actually having a futures position. Chicago Mercantile Exchange Glossary————A contract which gives the holder the right to buy or sell a specified asset at an agreed price on or before an agreed date in the future. The right to buy an asset is referred to as a call option. The right to sell is referred to as a put option. Dresdner Kleinwort Wasserstein financial glossary————A contract conferring the right but not the obligation to buy ( call) or to sell ( put) a specified amount of an instrument at a specified price within a predetermined time period. Exchange Handbook Glossary————A contract which allows you to speculate about future share (or assets) price movements by giving you the option to buy or sell the shares at a set price on or before a set date. It is an option and not an obligation to buy or sell, therefore if you don't exercise the right within the agreed period, the option lapses. The right to buy is called a 'call option' and the right to sell is called a 'put' option.These are the most common and largest type of shares issued by a company. Financial Services Glossary————The right (but not the obligation) to buy or sell securities at a fixed price within a specified period. London Stock Exchange Glossary————The right, granted for a limited time period, to buy ( call option) or sell ( put option) a quantity of a product ( underlying) at a pre-set price and date. NYSE Euronext Glossary
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1. a choice between two or more possible things, for example products:• Choosing between the available options in mobile phones is very confusing.
2. something that is offered in addition to the standard equipment when you buy something, especially a car:• Passenger airbags are available as standard or as an option on all of its cars.
3. COMPUTING one of the possible choices you can make when using a computer program:• the split-screen option
4. FINANCE also option to purchase when an organization buys something, the possibility that it will buy more later:option for/on• The Spanish air force is due to take 87 of the aircraft, with an option for a further 16.
• Shanghai Aviation agreed to buy 26 MD-80s and took options on 15 others.
5. FINANCE the right to buy or sell shares, bonds, currencies, or Commodities (= oil, metals, farm products etc) at a particular price within a particular period of time or on a particular date in the future:• Options allow an investor to bet on moves in large amounts of currencies using relatively small stakes.
• Each crude-oil options contract entitles its holder to buy or sell the equivalent of 1,000 barrels of oil at a predetermined price.
• The stock price fell and the option expired (= came to the end of the period of time when it could be used ) .
Aˈmerican ˌoption FINANCEan option that allows you to buy or sell particular shares etc at any moment during its life, rather than on a specific dateˈcall ˌoption FINANCEan option that gives you the right to buy shares etc at a particular price in the future. Investors who buy call options think the market will rise above that price:• Many speculators have been buying $4.50 call options on silver for March delivery, which gain value as the price of silver approaches the $4.50-an-ounce level.
ˌcovered ˈoption FINANCEan option where the seller has the shares etc available to give to the buyer if the share price rises and the buyer uses the optionˈcurrency ˌoption FINANCEan option to buy or sell a particular amount of a currency at a particular price in the futureˌdouble ˈoption also ˌput and ˈcall ˌoption FINANCEan option that gives the holder the right either to buy or to sell the shares etc involvedEuroˈpean ˌoption FINANCEan option that you can use to buy or sell shares etc on a specific date, rather than during a whole period of timeˈindex ˌoption FINANCEan option in the value of a share index (= the average value of a group of shares on a particular stockmarket):• the second most actively traded index option in the US
in-the-ˈmoney ˌoption FINANCEan option that has value because it allows you to buy shares etc for less than their present price, or to sell them for more than their present priceout-of-the-ˈmoney ˌoption FINANCEan option that expire S (= comes to the end of its life), or looks as though it will expire, with no value because it only allows you to buy shares etc above their present price, or to sell them for less than their present price:• Out-of-the-money options are worthless unless there is a sudden dramatic change in the value of the underlying investment.
another name for a double optionˈput ˌoption FINANCEan option that allows you to sell shares etc at a specific price in the future, which you buy because you think prices will fall below that pricean option to buy shares at a particular price, especially an option given to employees to buy shares in the company they work for; = stock option:• We have introduced an employee share option scheme.
ˈstock-ˌindex ˌoption FINANCEanother name for index optionˈstock ˌoption also emˌployee ˈstock ˌoption FINANCEan option to buy shares at a particular price, especially an option given to employees to buy shares in the company they work for; = share option:• a stock option plan for key employees that gives Mr O'Reilly options to buy four million shares of stock
ˈtraded ˌoption FINANCEan option that is bought and sold on an options exchange (= a financial market where options are traded)* * *
An option gives the buyer or holder the right, but not the obligation, to buy or sell an underlying financial asset or commodity. Unlike futures, where the buyer has to fulfil the contract, an option gives the choice of whether to exercise or not. An option contract specifies a future date on or before which it can be exercised. This date is known as the expiry date. The price of an option - the 'strike' or 'exercise' price - is the price at which it can be exercised. Options are very flexible instruments. They allow investors to benefit from favourable price movements while limiting the consequence of unfavourable price movements. Options holders have to pay a 'premium' for this protection as with any insurance contract. There are two kinds of option: a call, which gives the holder the right to buy the underlying instrument at a set exercise price; and a put, which gives the holder the right to sell the underlying instrument at a set strike price. More than one option transaction can be combined to create a spread. These strategies usually involve the simultaneous purchase and sale of options with different prices, or expiry dates, within the same class. American style options can be exercised at any time before the expiry date, whereas European style options can be exercised only at the specific expiry date and not before. Options can be traded on a recognized exchange such as the Chicago Board of Trade or over-the-counter (OTC). ► See also Derivatives, Futures, OTC, Spread.* * *
option UK US /ˈɒpʃən/ noun► [C or U] one of a number of choices or decisions you can make, or the ability or freedom to choose what you do: »You need to think very carefully about the various options.
»Our options look fairly limited at the moment.
have the option of doing sth »Insurance policyholders with the company have the option of waiving the excess altogether.
have the option to do sth »Customers have the option to cancel the contract within 21 days.
explore/review/look at the options »WTO members are reviewing options for improving market access for the least-developed countries.
assess/consider/weigh the options »The board will take its time in weighing the available options.
not be an option »If telecommuting isn't an option, firms can offer their employees more flexible working schedules.
have no/little option (but to) »In order to compete, we have no option but to cut prices.
► [C] FINANCE, STOCK MARKET an agreement that can be bought and sold, that gives the owner the right to decide whether to buy or sell shares, bonds, etc. for a fixed price within an agreed time period or on a particular date: share/stock option »I took the job because they were offering good health care and stock options.
exercise an option (to do sth) »We acquired the right to own a 100% interest in the company, and we expect to exercise that option.
»The phone company could exercise their option to sell part of their stake in Verizon.
an option on sth »She has options on about 448,000 shares.
► [C] FINANCE, COMMERCE an agreement in which a company buys a product from another company and has the right to buy more of that product later, but does not have to do so: take an option (on/for sth) »The airline also said it plans to take options on three of the 777-200 jets.
► [C] COMMERCE, MARKETING something that is added, at extra cost, to a basic product or service to make it more attractive, efficient, etc.: »Options such as metallic paint and leather seats increase the price of the car considerably.
► [C] IT one in a list of possible actions that appears on a computer screen when you click on a button: »Click on ""File"" to see the list of options.
► [C] COMMUNICATIONS one of a set of numbered choices that you are given on the phone when you call a company or organization, that allow you to choose which person, department, etc. you want to speak to: »Listen carefully and choose from one of the following options.
→ See also AMERICAN OPTION(Cf. ↑American option), ASIAN OPTION(Cf. ↑Asian option), CALL OPTION(Cf. ↑call option), COVERED OPTION(Cf. ↑covered option), CURRENCY OPTION(Cf. ↑currency option), DOUBLE OPTION(Cf. ↑double option), EUROPEAN OPTION(Cf. ↑European option), GREENSHOE OPTION(Cf. ↑greenshoe option), INDEX OPTION(Cf. ↑index option), IN-THE-MONEY OPTION(Cf. ↑in-the-money option), NUCLEAR OPTION(Cf. ↑nuclear option), OUT-OF-THE-MONEY OPTION(Cf. ↑out-of-the-money option), PUT AND CALL OPTION(Cf. ↑put and call option), PUT OPTION(Cf. ↑put option), SHARE OPTION(Cf. ↑share option), STOCK-INDEX OPTION(Cf. ↑stock-index option), STOCK OPTION(Cf. ↑stock option), TRADED OPTION(Cf. ↑traded option)
Financial and business terms. 2012.
