An option is a financial product belonging to the category of derivatives. An option gives you the right to buy or sell at a pre-agreed price what is called an underlying asset. This underlying security can be a stock, bond or commodity, or any other asset.
Note that if an option allows you to buy something, it is a call option. On the other hand, if an option allows you to sell something, it is a put option.
The right to buy or sell bestowed by an option is limited in time. The maturity date is the date until which an option can be exercised.
About The Author: Edouard Gielec, staff writer
Edouard is a financial analyst at Hardbacon. He is responsible for compiling lists of securities that our users can find in the "Explore" section of the application.
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