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. Investors who purchase call options bet the stock will be worth more than the price set by the option (the strike price), plus the price they paid for the option itself. Buyers of put options bet the stock's price will go down below the price set by the option. An option is part of a class of securities called derivatives, so named because these securities derive their value from the worth of an underlying investment. The New York Times Financial Glossary

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option op‧tion [ˈɒpʆn ǁ ˈɑːp-] noun [countable]
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 FINANCE
an option that allows you to buy or sell particular shares etc at any moment during its life, rather than on a specific date
ˈcall ˌoption FINANCE
an 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 FINANCE
an option where the seller has the shares etc available to give to the buyer if the share price rises and the buyer uses the option
ˈcurrency ˌoption FINANCE
an option to buy or sell a particular amount of a currency at a particular price in the future
ˌdouble ˈoption also ˌput and ˈcall ˌoption FINANCE
an option that gives the holder the right either to buy or to sell the shares etc involved
Euroˈpean ˌoption FINANCE
an option that you can use to buy or sell shares etc on a specific date, rather than during a whole period of time
ˈindex ˌoption FINANCE
an 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 FINANCE
an 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 price
out-of-the-ˈmoney ˌoption FINANCE
an 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 option
ˈput ˌoption FINANCE
an 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 price
ˈshare ˌoption also employee share option FINANCE
an 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 FINANCE
another name for index option
ˈstock ˌoption also emˌployee ˈstock ˌoption FINANCE
an 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 FINANCE
an 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.

keep your options open — Cf. keep your options open
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.

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