An option contract is basically a contract that give the holder the rights, but not the obligation, to buy or sell an underlying asset (Example stocks) at a predetermined
…price (strike price) before or at a certain time in the future (expiration date) for a consideration (premium). Options are a derivative security. That is, the price of options fluctuated when the price of another security, moved. There are four specifications uniquely describe any option contract: 1) The type (call or put), 2) Underlying stock name, 3) Expiration date and 4) Strike price A stock options contract gives the owner the right to buy or sell a specified number of stocks (generally 100) of a company. The options holder can choose to exercise and convert the options to the company's stock when it is to their advantage. A call option gives the holder the right, but not the obligation, to buy a fixed number of shares of a company at a specific price before the option's expiration date. A put option gives the holder the right, but not the obligation, to sell a fixed number of shares of a company at a specific price before the option's expiration date As an example, the term "ABC June 09 75 call" is an option to buy (a call) 100 shares of ABC stock (Underlying stock name) at $75 (Strike price) per share. The option expires in June 2009 (Expiration date). The price of a listed option (premium) is quoted on a per-share basis. Thus if the price of ABC June 75 call is quoted at $3, buying the option would cost $300 ($3 x 100 shares), excluding commission charge by brokers. In short, options are just another form of investment that can be bought or sold just like a stock, a commodity or a bond. (MORE) 
