OPTIONS

An option is an contract which gives buyer the right but not the obligation to buy or sell an underlying asset at an agreed price on or before the specified date.

The buyer of the option is known as option holder whereas option seller is known as option writer.

Call Option is the contract which gives buyer the right but not the obligation to buy an underlying asset at the agreed price on or before specific date.

Put Option is the contract which gives buyer the right but not the obligation to sell an underling asset at the agreed price on or before specific date.

Types of Option

American Option
American option is a contract which gives the buyer the right but not the obligation to buy or sell an underlying asset at an agreed price on or before a specific date.

European Option
European option is a contract which gives the buyer the right but not the obligation to buy or sell an underlying asset at an agreed price on a specific date.