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option

definition

A contract that permits one party to buy from (or sell to) the other party something at a prespecified price during a prespecified period of time, leaving the choice of whether to do this or not (whether to "exercise" the option) up to the first party, which buys the option. Options exist for many assets, including foreign exchange.

Related Terms

 • option class  • swaption  • dealing desk  • Deal Ticket  • Quality option  • exercise price  • Expiration Time  • Omega
 more related terms