Option Finance Definition

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In mathematical finance, the Greeks are the quantities representing the sensitivity of the price of derivatives such as options to a change in underlying parameters on which the value of an instrument or portfolio of financial instruments is dependent. The name is used because the most common of these sensitivities are denoted by Greek letters (as are some other finance measures).

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Options give you the right to buy (or sell) a security at a specific price on or by a certain date. You’re not locked into buying or selling, though-hence, option . Options come in lots of flavors (employee stock options and naked options, to name two), but the important thing to remember is that they don’t give you the same benefits as actual stocks.

Option definition is – an act of choosing. How to use option in a sentence. Synonym Discussion of option.

Financial derivatives, such as stock options, are complex trading tools that allow investors to create many trading strategies that they would otherwise not be.

Options are a financial derivative that trade based on the price action of the underlying asset and are bought and sold in units called contracts, which usually represent 100 shares per contract of the underlying.Options come in two different types: calls and puts. Traders can choose to buy (option holder) a call/put long or sell them (option writer) to the buyers depending on their trading.

An option is a financial contract that gives an investor the right, but not the obligation, to either buy or sell an asset at a pre-determined price (known as the strike price) by a specified date (known as the expiration date).