Option

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.

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).