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index option

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Financial Dictionary

Index Option

A call or put option on a financial index.

Investopedia Commentary

Investors trading index options are essentially betting on the overall movement of the stock market as represented by a basket of stocks. Options on the S&P 500 are some of the most actively traded options in the world.

Related Links

Options Basics Tutorial
Index Investing Tutorial

See also: Index, Index Fund, Index Futures, Option, QQQ

Also spelled: Index options

Investopedia.com. Copyright © 1999-2005 - All rights reserved. Owned and Operated by Investopedia Inc.
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Financial Dictionary

index option

A call option or put option with a specific index as the underlying asset. For example, a call option on the S&P 500 gives the option buyer the right to purchase the value of the index at a fixed price until a predetermined date. Index options provide a means to leverage a bet on the future direction of the market or of a particular industry segment without purchasing all the individual securities. Use of the option can entail considerable risk for an investor.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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Legal Dictionary

Main Entry: index option
see OPTION 3
Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.
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