Options

Definition

Options are financial derivatives that give the buyer the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price within a certain period of time. They are used for hedging risks or for speculation in securities markets.

Related terms

Derivatives: Financial contracts whose value is derived from the performance of an underlying entity such as an asset, index, or interest rate.

Securities Markets: Platforms where securities like stocks and bonds are bought and sold; they facilitate capital flow in the economy.

Hedging: A strategy used in trading and investing to reduce the risk of adverse price movements in an asset