What is an option? 158The purchase of an options contract gives the buyer the rightto buy (call options contract) or sell (putoptions contract)some other asset at a prespecified timeand a prespecified price.
Theunderlying assetcan be any asset with a well-definedvalue or price. Examples are options on individual stocks, indices, futures contracts, bonds, currencies, other options, etc.
Derivative securities: Options - Introduction