Definition

Key Term

A contract that gives the owner the right, but not the obligation, to purchase a specific financial instrument for a specific price within a specific period of time.

The price at which the owner of an option can purchase or sell the underlying security if they want to utilize the option.

A put option is said to be this when the market price of the underlying security is equal to the exercise price of the put option.

A contract that gives the owner the right, but not the obligation, to sell a specific financial instrument for a specific price within a specific period of time.