Question

What is an option in stocks

Answer 1

A contract known as an option grants the buyer the right, but not the duty, to purchase or sell an underlying asset (such as a stock or index) at a given price on or before a particular date (listed options are all for 100 shares of the particular underlying asset).

What is an option? Explain.

An option is a contract that grants the buyer the right, but not the responsibility, to buy the underlying asset (in the case of a call) or sell it (in the case of a put) at a certain price on or before a specific date.

Options are used by people for revenue, speculation, and risk hedging.

Because they draw their value from an underlying asset, options are classified as derivatives.

A stock option contract normally entails 100 shares of the underlying stock, but other underlying assets, such as bonds, currencies, or commodities, are also acceptable.

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