Common Contracts
1 similar null contracts
COPYRIGHTED MATERIALOctober 20th, 2015
An option is a contract between two parties that determines the time and price at which a stock may be bought or sold. The two parties to the contract are the buyer and the seller. The buyer of the option pays money, known as the option’s premium, to the seller. For this premium, the buyer obtains a right to buy or sell the stock depending on what type of option is involved in the transaction. Because the seller has received the premium from the buyer, the seller now has an obligation to perform under that contract. Depending on the option involved, the seller may have an obligation to buy or sell the stock.
