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Options and Futures

Underlying security

Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell a specific asset at a predetermined price within a certain time period. This underlying asset, also known as the "security," can be a stock, bond, commodity, or currency. When an option holder decides to exercise their right, they are essentially purchasing or selling the security at the agreed upon price. This flexibility is what makes options an attractive tool for investors to manage risk and speculate on market movements.

Related terms

Spot

Understand the meaning and definition of Spot in the context of stock market, trading, and investments.

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Gamma

Understand the meaning and definition of Gamma in the context of stock market, trading, and investments.

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At-the-Money Option

Understand the meaning and definition of At-the-Money Option in the context of stock market, trading, and investments.

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Call

Understand the meaning and definition of Call in the context of stock market, trading, and investments.

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Price Discovery

Understand the meaning and definition of Price Discovery in the context of stock market, trading, and investments.

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Producer Price Index (PPI)

Understand the meaning and definition of Producer Price Index (PPI) in the context of stock market, trading, and investments.

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