- The definition of an option is the choice or the power to make a choice, or a contract for the right to buy or sell something at a specific price within a specific time period.
- An example of an option is the choice between ice cream and pumpkin pie for dessert.
- An example of an option is the ability to buy ABC stock at a certain price, regardless of the prevailing market price.
Two delicious dessert options!
option definition by Webster's New World
- the act of choosing; choice
- the power, right, or liberty of choosing
- something that is or can be chosen; choice
- an optional item that can be purchased to supplement or enhance another consumer item
- a contract by which one person, company, etc. gives another, for a consideration, the right to buy, sell, or lease something, sign or renew a contract, etc. at a specified price and within a specified time
- Football an offensive play in which the ball carrier decides whether to hand off, run with, lateral, or pass the football
Origin: French ; from Classical Latin optio ; from optare, to wish, desire, ultimately ; from Indo-European an unverified form op-, to choose, prefer
- Sports to transfer (a player) to a minor league with the option of recalling him
- to grant or acquire by means of an option (); specif., to buy or sell (rights) to (a book, film, etc.) in this way
option definition by American Heritage Dictionary
- The act of choosing; choice. See Synonyms at choice.
- The power or freedom to choose.
- a. The exclusive right, usually obtained for a fee, to buy or sell something within a specified time at a set price.b. The privilege of demanding fulfillment of a contract at a specified time.c. A stock option.d. The right of the holder of an insurance policy to specify the manner in which payments are to be made or credited to the policyholder.e. Baseball The right of a major-league team to transfer a player to a minor-league team while being able to recall the player within a specified period.
- Something chosen or available as a choice.
- An item or feature that may be chosen to replace or enhance standard equipment, as in a car.
- Football An offensive play in which a back, usually the quarterback, has the choice of running with the ball or throwing a forward pass.
- To acquire or grant an option on: “had optioned for a film several short stories about two policemen” (Barbara Goldsmith).
- Baseball To transfer (a major-league player) to a minor-league club on option.
Origin: Latin optiō, optiōn-.
option - Business Definition
- A contract that permits the owner, depending on the type of option held, to purchase or sell an asset at a fixed price until a specific date. An option to purchase an asset is a call and an option to sell an asset is a put. Depending on how an option is used, the risks can be quite high. See also Asian option, conventional option, European option, exercise price, exotic option, expiration date 1, knock-out option, lapsed option, long-term equity anticipation securities, restricted option, stock option 1.
- An addition to a basic model. For example, four-wheel drive is an option on many trucks and SUVs.
- See incentive stock option.
option - Investment & Finance Definition
A contract that gives the buyer the right to purchase (call) a security from the option writer or to sell (put) a security to the writer. A writer is the investor who creates the option, hoping to profit from the premium that the purchaser pays. An option specifies a price at which the option can be executed (called the strike, or exercise, price), and a time period during which the option is valid. Exchange-traded options have standardized terms, while those traded between individuals are customized. Options provide a type of insurance for investors who want to lock in a maximum price that they can buy a stock or other investment for or a minimum price at which the stock can be sold.
- A contract that permits the owner, depending on the type of option held, to purchase or sell an asset at a fixed price until a specific date. An option to purchase an asset is a call and an option to sell an asset is a put. Depending on how an investor uses options, the risks can be quite high. Investors in options must be correct on timing as well as on valuation of the underlying asset to be successful. See also Asian option, chooser option, combination option, conventional option, European option, exercise price, exotic option, expiration date, knock-out option, lapsed option, long-term anticipation securities, restricted option, stock option.
- See incentive stock option.
option - Legal Definition
- The power or right to make a choice.
- A contract to keep an offer open for a specified period of time so that the person making the offer cannot suddenly withdraw it during that period.
- The right carried by that contract.
- The right to sell or buy a certain number of stocks or bond at a set price within a specified time period.
- To give or take an option on something.