An agreement whereby, on payment of a premium, one person grants another the right to buy or sell certain goods or choses-in-action at an agreed price. at or within a stated future time. The term is usually used with reference to dealings on the Stock Exchange or on the London Commodity Exchange. Options to Sell are known as deals for the 'put', options to buy are deals for the 'call'. It is possible to have a double option, i.e. to buy or sell.
It is a criminal offence for a director of a company to deal in options to buy or sell shares or debentures of his company or of its associated companies. For this purpose a director includes his wife or children.
|Reference: The Penguin Business Dictionary, 3rd edt.|