Options

Options - An option is the right, but not the obligation, to buy (call option) or sell (put option) a financial asset at a predetermined price (called the exercise price or strike price) at some particular date in the future. The option price will depend on the prospects of changes in the price of the underlying security to which it relates.In a 'European' option the buyer only has the right to exercise the option on the expiry date, whereas an 'American' option may be exercised at any time up to the expiry date. In both cases, however, they can be traded rather than exercised at any time.