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option

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op⋅tion

  [op-shuhn]
Use option in a Sentence
–noun
1. the power or right of choosing.
2. something that may be or is chosen; choice.
3. the act of choosing.
4. an item of equipment or a feature that may be chosen as an addition to or replacement for standard equipment and features: a car with a long list of extra-cost options; a telephoto lens option for a camera.
5. stock option.
6. a privilege acquired, as by the payment of a premium or consideration, of demanding, within a specified time, the carrying out of a transaction upon stipulated terms; the right, as granted in a contract or by an initial payment, of acquiring something in the future: We bought one lot and took a 90-day option on an adjoining one.
7. Football. a play in which a back has a choice of either passing or running with the ball.
–verb (used with object)
8. to acquire or grant an option on: The studio has optioned his latest novel for film adaptation.
9. to provide with optional equipment: The car can be fully optioned at additional cost.
Origin:
1595–1605; < L optiōn- (s. of optiō) choice, equiv. to op(tāre) to select (see opt ) + -tiōn- -tion

Related forms:
op⋅tion⋅a⋅ble, adjective

Synonyms:
2. See choice. 2, 3. selection, election.
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
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op·tion   (ŏp'shən)   
n.  

  1. The act of choosing; choice. See Synonyms at choice.

  2. The power or freedom to choose.

    1. The exclusive right, usually obtained for a fee, to buy or sell something within a specified time at a set price.

    2. The privilege of demanding fulfillment of a contract at a specified time.

    3. A stock option.

    4. The right of the holder of an insurance policy to specify the manner in which payments are to be made or credited to the policyholder.

    5. Baseball The right of a major-league team to transfer a player to a minor-league team while being able to recall the player within a specified period.

  4. Something chosen or available as a choice.

  5. An item or feature that may be chosen to replace or enhance standard equipment, as in a car.

  6. Football An offensive play in which a back, usually the quarterback, has the choice of running with the ball or throwing a forward pass.

tr.v.   op·tioned, op·tion·ing, op·tions

  1. To acquire or grant an option on: "had optioned for a film several short stories about two policemen" (Barbara Goldsmith).

  2. Baseball To transfer (a major-league player) to a minor-league club on option.


[Latin optiō, optiōn-.]
The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Word Origin & History

option 
1604, "action of choosing," from Fr. option, from L. optionem (nom. optio) "choice, free choice," related to optare "to desire, choose," from PIE base *op- "to choose, prefer." Meaning "thing that may be chosen" is attested from 1885. Commercial transaction sense first recorded 1755 (the verb in this sense is from 1934). As a N.Amer. football play, it is recorded from 1954. Optional, in ref. to things which may be done or not done, is from 1792.
Online Etymology Dictionary, © 2001 Douglas Harper
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Financial Dictionary

Option

A privilege sold by one party to another that offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price during a certain period of time or on a specific date.

Investopedia Commentary

Options are extremely versatile securities that can be used in many different ways. Traders use options to speculate, which is a relatively risky practice, while hedgers use options to reduce the risk of holding an asset.

Related Links

Options Basics Tutorial
Trading A Stock Versus Stock Options - Part One
Trading A Stock Versus Trading Stock Options - Part Two

See also: American Option, Call, Derivative, Embedded Option, Employee Stock Option (ESO), European Option, Index Option, Intrinsic Value, LEAPS, Leverage, Max Pain, Option Chain, Options Contract, Put, Spread, Strike Price, Time Value, Writer

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Financial Dictionary

option

  1. A contract that permits the owner, depending on the type of option held, to purchase or sell an asset at a fixed price until a specific date. An option to purchase an asset is a call and an option to sell an asset is a put. Depending on how an investor uses options, the risks can be quite high. Investors in options must be correct on timing as well as on valuation of the underlying asset to be successful. See also Asian option, chooser option, combination option, conventional option, European option, exercise price, exotic option, expiration date, knock-out option, lapsed option, long-term anticipation securities, restricted option, stock option.

  2. See incentive stock option.


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: op·tion
Pronunciation: 'äp-sh&n
Function: noun
1 : the power or right to choose; also : a choice made or available
2 : a privilege of demanding fulfillment of a contract on any day within a specified time
3 : a contract conveying in exchange for the payment of a premium a right to buy or sell designated securities, commodities, or interests in property at a specified price during a stipulated period; also : the right conveyed by such a contract option>
call option
: an option to buy at a fixed price at or within a certain time —compare PUT OPTION in this entry
covered option
: an option in which the optionor owns the security or commodity to be conveyed under the option —compare NAKED OPTION in this entry
futures option
: an option on futures
in·cen·tive stock option
/in-'sen-tiv-/
: a stock option granted by a corporation to its officers and employees as supplementary compensation that is subject to special tax treatment under the Internal Revenue Code
index option
: an option on a stock index
naked option
: an option in which the optionor does not own the security or commodity and will have to purchase it at market price if the optionee decides to exercise the option —compare COVERED OPTION in this entry
put option
: an option to sell for a fixed price at or within a specified time
stock option
: an option giving the optionee the right to purchase a specified number of shares of stock from a corporation at a specified price at or within a specified time —see also INCENTIVE STOCK OPTION in this entry
4 : a right of an insured to choose the form in which various payments due him or her on a policy shall be made or applied
dividend option
: an option allowing the owner of a participating insurance policy and esp. a life insurance policy to determine how dividends are to be paid (as in cash or by being applied as payment for additional insurance)
installments–for–a–fixed–amount option
: a settlement option in which the insurer retains the policy proceeds and makes periodic payments of a fixed amount until the proceeds are exhausted called also fixed amount option
installments–for–a–fixed–pe·ri·od option
: a settlement option in which the policy proceeds are retained by the insurer and paid in installments over a fixed period of time called also fixed period option
interest–only option
: a settlement option in which the insurer retains the policy proceeds and makes interest payments at a guaranteed minimum rate
joint–and–last–survivorship option
: an option in which the insurer makes periodic payments to two or more persons (as a husband and wife) of the proceeds or usually cash value of a policy until the death of the last survivor
life income option
: a settlement option in which the insurer retains the policy proceeds and makes periodic payments for the beneficiary's life or for a specified number of years even after the beneficiary's death with payments to a different recipient
non·for·fei·ture option
/"nän-'for-f&-"chur-/
: an option (as to surrender the policy for its cash value or convert the policy to one with a smaller face amount or to a term policy with a shorter period) available to a policyholder who has ceased paying premiums
settlement option
: an option to receive payments of the proceeds of a life insurance policy other than by lump sum

Main Entry: option
Function: transitive verb
: to grant or take an option on optioning riverfront land —Rita Koselka>
Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.
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Computing Dictionary

option
command line option

The Free On-line Dictionary of Computing, © 1993-2007 Denis Howe
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