Options

From Bogleheads

Options

An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.

- from [Investopedia]

An option can only be exercised before the expiry date if it's an American-style option. European-style options can only be exercised on the expiry date (somewhat more like futures in that respect).

Links

• Options Basics: What Are Options?, on Investopedia. Calls and puts are described here.
• Definitions of options on Google

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