An Option in Finance Is a Right, Not an Obligation
An option is a choice. In finance it is a specific contract granting the right to buy or sell at a set price.
An option is a choice. Finance defines it precisely: an option contract gives the holder the *right but not the obligation* to buy or sell an asset at an agreed price by an agreed date. That asymmetry is the whole point — the holder exercises only if it is advantageous, and loses only the premium paid if it is not.
- A choice. *Several options.*
- A financial contract. *A call option.*
- A right to buy. *An option on the property.*
- Optional — not compulsory. *An optional module.*
Word forms
| Form | Word | Example |
|---|---|---|
| Noun | option | The best option. |
| Plural | options | Limited options. |
| Adjective | optional | Optional extras. |
| Verb | opt | Opt out. |
| Related | adopt | Adopt a policy. |
How it is used in a sentence
- An option is a right, not a duty.Finance.
- They opted out of the scheme.Chose not to participate.
- Keep your options open.Avoid committing.
Option terms
- Call — the right to buy
- Put — the right to sell
- Strike price — the agreed price
- Premium — what the option itself costs
- Expiry — the date after which the right lapses
From Latin *optionem*, a choice, from *optare*, to choose or wish — the same root as *adopt* and *opt*.
Call or put?
A call is the right to buy; a put is the right to sell. Both are options, and both cost a premium.
Are adopt and option related?
Yes. Both come from Latin *optare*, to choose. To adopt is to choose towards oneself.