Option (finance)

In finance, an option is a contract which gives the buyer (the owner or holder) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date, depending on the form of the option. The strike price may be set by reference to the spot price (market price) of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. The seller has the corresponding obligation to fulfill the transaction – to sell or buy – if the buyer (owner) "exercises" the option. An option that conveys to the owner the right to buy at a specific price is referred to as a call; an option that conveys the right of the owner to sell at a specific price is referred to as a put. Both are commonly traded, but the call option is more frequently discussed.

The seller may grant an option to a buyer as part of another transaction, such as a share issue or as part of an employee incentive scheme, otherwise a buyer would pay a premium to the seller for the option. A call option would normally be exercised only when the strike price is below the market value of the underlying asset, while a put option would normally be exercised only when the strike price is above the market value. When an option is exercised, the cost to the buyer of the asset acquired is the strike price plus the premium, if any. When the option expiration date passes without the option being exercised, then the option expires and the buyer would forfeit the premium to the seller. In any case, the premium is income to the seller, and normally a capital loss to the buyer.

Option

Option may refer to:

Computing

Entertainment

History

Legal rights

Option (music magazine)

Option (subtitled Music Alternatives, then Music Culture) was a music magazine based in Los Angeles, California.

History

Originally called OPtion, it, along with Sound Choice, were the dual successors to the earlier music magazine OP, published by John Foster and the Lost Music Network and known for its diverse scope and the role it played in providing publicity to DIY musicians in the midst of the cassette culture. When Foster ended OP after only twenty-six issues, he held a conference, offering the magazine's resources to parties interested in carrying on; attendant journalist David Ciaffardini went on to start Sound Choice, while Scott Becker, alongside Richie Unterberger, founded Option. Whereas Sound Choice was described as a low-budget and "chaotic" publication in spirit, Option was characterized as a "profit making operation" right at the start, meant to compete with the newly founded Spin.

The magazine began as a small press publication, described by the New Music Periodicals review of the Music Library Association as "encompassing rock, jazz, classical, and electronic forms".The New York Times noted its dedication to coverage of indie music releases, with each issue containing "hundreds" of reviews: "not all rock by any means, but it's hard to imagine the existence of Option before punk rock." The magazine used 40-50 unpaid reviewers at a time, few of whom were professional critics.

Option (aircraft purchasing)

An option, when purchasing aircraft, allows an airline to purchase additional aircraft in the future at an agreed price and date.

When placing orders for new aircraft, airlines commonly obtain options from the aircraft manufacturer. These options allow the airline to delay the purchase of additional aircraft until market conditions become clearer and the purchase can be justified. It also reserves the airline a place in the manufacturing queue, for a guaranteed delivery slot. When the airline finally exercises its options, it can place its order without having to join the end of the queue which otherwise may delay the delivery of the aircraft for years. If future conditions do not justify expansion of the airline's fleet, the airline is not obliged to purchase the aircraft. An example of this is of an airline purchasing 30 planes up front and having options for an additional 20 for later delivery.

Depending on economic conditions, manufacturers often sell aircraft purchasing options below either the real or Aircraft Bluebook value of the aircraft.