A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date.
 | | Term of the Day | Words to Know | | |  | | Stock Option | | A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date. There are two types of options: puts, which is a bet that a stock will fall, or calls, which is a bet that a stock will rise. | | Read More » | | Related to "Stock Option" | | | | Put Option | | A put option gives the owner the right to sell a specified amount of an underlying security at a specified price before the option expires. | | Read More » | | | Call Option | | A call option is an agreement that gives the option buyer the right to buy the underlying asset at a specified price within a specific time period. | | Read More » | | | American Option | | An American option is an option contract that allows holders to exercise the option at any time prior to and including its expiration date. | | Read More » | | | European Option | | A European option can only be exercised on its maturity date, not before like an American option resulting in a lower premium for European options. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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