Options Contract Definition

An Options Contract, also called an Option or a Contract, enables a buyer to exercise the right in the future to buy or sell a security, for a certain price by a certain date.

The buyer of an option is not obligated to exercise the right to buy or sell by that date, and can sell the option to someone else, and or let it expire worthless if it does not meet its strike price by expiration.

Options to buy a security are called Calls, while options to sell a security are called Puts.