Option contract - is a contract which gives you the right, not the obligaion to buy or sell an underlying security (stock, bond or future) within a pre-determined time and at the specified price.
Put Option - an option which gives the buyer the right to sell the underlying security at a particular price, within a paticular date.
Call Option - an option which gives the buyer the right to buy the underlying security at a particular price, within a paticular date.
Exercise price - the price at which the buyer of a call or put may choose to exercise his right to buy or sell an underying security.
European Option - an option wich may be exercised only on the expiration date.
American Option - type of an option which may be exericds any time before the expiration or just on the expiration date.
Expiration Date - the last date on which the option may be exercised.
Naked Writing - Selling a call or an option in which the seller doesn’t have any opposite cash, stocks or futures market position.
Option Premium - the price of an option contract paid by the buyer to seller of an option contract.
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