Option Definition & Meaning | Financial Term | CSIMarket
CSI Market
Sign In | Register

Glossary

Option

Financial Term

An option is a financial contract in which the buyer has the ability, but not the obligation, to purchase or sell an underlying asset at a specific price and time. The underlying asset can be a stock, index, currency, or commodity.

Options are used in the financial industry for a variety of purposes. They are often used as a form of insurance against potential losses. For example, an investor who owns a stock and is afraid it will decrease in value can purchase a put option, which gives them the right to sell the stock at a predetermined price, thereby limiting their potential losses. On the other hand, if an investor believes a stock will increase in value, they can purchase a call option, giving them the right to buy the stock at a predetermined price, potentially resulting in profits if the stock increases in value.

Options are also used for speculation and hedging strategies by traders and investors. They can be used to generate income or protect portfolio positions.

Overall, options are a versatile financial tool that can be used in a variety of ways to manage risk and generate profits in the financial industry.


More Glossary Terms Beginning with O
  • Off-Label
    Use of a drug for a disease or condition other than the indication for which it was approved by a regulatory authority, such as the FDA or EMEA.
    Health Care Term Letter: O
  • On Balance Volume OBV
    The concept behind the indicator: volume precedes price. OBV is a simple indicator that adds a periods volume when the close is up and subtracts the periods volume when the close is down. A cumulative total of the volume additions and subtractions forms the OBV line. This line can then be compared with the price chart of the underlying security to look for divergences or confirmation. A rising vol
    Technical Indicator Letter: O
  • Oncology
    Branch of medicine which studies the characteristics of tumors, their classification, diagnosis and therapy.
    Health Care Term Letter: O
  • Open Pit Mine
    A mine that is entirely on the surface. Also referred to as an open-cut or open-cast mine.
    Manufacturing Term Letter: O
  • Open-label Clinical Trial
    A trial in which both the treating physician and the patient know whether they are receiving the experimental treatment or control/placebo treatment.
    Health Care Term Letter: O
  • Operating Cost Per Available Seat Mile Cost Per ASM CASM
    Represents operating expenses divided by Available Seat Mile ASMs. Airline Industry
    Transportation Term Letter: O
  • Operating Income Growth Rates
    The percentage of Operating Income change within a specific period (Y/Y year on year; Seq sequential, from proceeding period; TTM trailing twelve months).
    Fundamental Analysis Letter: O
  • Operating Margin
    The measurement of profitability, Operating profit margin represents proportion of Operating income (total sales less operating costs) to total sales. Operating Margin Formula = (Operating Income / Revenues) * 100
    Fundamental Analysis Letter: O
  • Operating Profit Margin
    The measurement of profitability, Operating profit margin represents proportion of Operating income (total sales less operating costs) to total sales. Operating Margin Formula = (Operating Income / Revenues) * 100
    Fundamental Analysis Letter: O
  • Operating revenue yield per Available Seat Mile Average Yield per ASM
    Represents the average scheduled flown passenger fare revenue for each available seat mile (ASM). Airline Industry
    Transportation Term Letter: O
  • Option
    The right, not the obligation, to execute a transaction at a designated price, generally involving equity interests, interest rates, currencies or commodities.
    Financial Term Letter: O
  • Option ARMs Mortgage Loans
    The option ARM residential real estate loan product is an adjustable-rate mortgage loan that provides the borrower with the option each month to make a fully amortizing, interest-only, or minimum payment. The minimum payment on an option ARM loan is based on the interest rate charged during the introductory period. This introductory rate has usually been significantly below the fully indexed rate.
    Financial Term Letter: O