Stock options give the holder the right to buy or sell shares at a predetermined price until the option expires.
 | | Stock Option | | Stock options are sold by one party to another, that give the option buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain period of time. American options, which make up most of the public exchange-traded stock options, can be exercised any time between the date of purchase and the expiration date of the option. European options, also known as "share options" in the United Kingdom, are less common and can only be redeemed at the expiration date. | | Breaking it Down: | | Stock options normally represent 100 shares of an underlying stock. Therefore, if the premium (cost) of an option is... | | Read More » | | Related to "Stock Option" | | | | Exchange-Traded Option | | An exchanged-traded option is a standardized contract to either buy (using a call option) or sell (using a put option) a set quantity of a specific financial product (the underlying asset), on or before a pre-determined date (the expiration date) for a pre-determined price (the strike price). | | Read More » | | | Vanilla Option | | A vanilla option gives the holder the right to buy or sell an underlying asset at a predetermined price within a given time frame. | | Read More » | | | Strike Price | | Strike price is the price at which the underlying asset of a derivative can be bought or sold at. | | Read More » | | |  | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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