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option meaning

[ 'ɔpʃən ] Pronunciation:   "option" in a sentence
  • Noun: option  ópshun
    1. The right to buy or sell property at an agreed price; the right is purchased and if it is not exercised by a stated date the money is forfeited 
    2. One of a number of things from which only one can be chosen
      "what option did I have?"
      - alternative, choice 
    3. The act of choosing or selecting
      - choice, selection, pick

    Derived forms: options

    See also: opt, optative

    Type of: action, deciding, decision making, derivative, derivative instrument

    Encyclopedia: Option


  • [Architecture]

    An agreement between an owner and prospective user of a property which, for a specified sum, grants the latter the right to buy or rent the property within a specified period of time.


  • [Business]
    AmE / noun

    AMERICAN-STYLE OPTION, CALL OPTION, CURRENCY OPTION, EMPLOYEE STOCK OPTION, EUROPEAN-STYLE OPTION, GREENSHOE OPTION, INDEX OPTION, NUCLEAR OPTION, OVERALLOTMENT OPTION, PUT OPTION, SHARE OPTION, STOCK OPTION

    1 [C,U] option (of doing sth/to do sth)

    something that you can choose to have or do; the freedom to choose what you do:

    There are various options open to us.

    Employees were given the option of working four days a week.

    Closing the factory is not an option.

    This particular model comes with a wide range of options

    (= extra things that you can choose to have).

    The pension plan gives you the option to vary your monthly payments.

    ❖ to have/give sb/offer sb an option

    ◆ to choose/take an option

    2 (Finance ) [C]

    the right to buy or sell a fixed quantity of shares, currencies or commodities (= for example, grain, coffee, cotton or metals) for a particular price within a particular period or on a particular date:

    The five directors earned more than $3 million through the sale of shares and options.

    She has an option to buy 100 000 shares.

    When does the option expire?

    ❖ to buy/exercise/sell/trade/write an option

    ◆ an options contract the options exchange/market

    3 (Finance ) [C]

    the right to buy sth or more of sth in the future:

    We have an option on the land and will purchase it soon.

    The airline has bought 100 planes with an option for another 50.

    OPTION TO PURCHASE

    ❖ to have/exercise/take (up) an option


  • [Economics]
    The right to buy or sell a fixed quantity of a commodity, currency, or security at a particular date at a particular price (the exercise price). Unlike futures, the purchaser of an option is not obliged to buy or sell at the exercise price and will only do so if it is profitable; if the option is allowed to lapse, the purchaser loses only the initial purchase price of the option (the option money).

    An option to buy is known as a call option and is usually purchased in the expectation of a rising price; an option to sell is called a put option and is bought in the expectation of a falling price or to protect a profit on an investment. Options, like futures, allow individuals and firms to hedge against the risk of wide fluctuations in prices; they also allow speculators to gamble for large profits with limited initial payments.

    Professional traders in options make use of a large range of potential strategies, often purchasing combinations of options that reflect particular expectations or cover several contingencies (see butterfly, straddle).

    In a European option the buyer can only exercise the right to take up the option or let it lapse on the expiry date, whereas with an American option this right can be exercised at any time up to the expiry date. European options are therefore cheaper than American options.

    See also:

    exercise notice, intrinsic value, option to double, time value, traded options.


  • [Finance]
    Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date. Investors, not companies, issue options. Buyers of call options bet that a stock will be worth more than the price set by the option (the strike price), plus the price they pay for the option itself. Buyers of put options bet that the stock's price will drop below the price set by the option. An option is part of a class of securities called derivatives, which means these securities derive their value from the worth of an underlying investment.

Examples

    More:   Next
  1. thus he would have had a deadly option.
  2. you have an option on a piece of land.
  3. there are three options in our college.
  4. there were not many options open to him.
  5. i pondered his options.

Related Words

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