Option
Option is an abstract type and also direct subtype of Tradable
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TYPE INCLUSION RELATIONSHIPS
AVAILABLE FUNCTIONS
AVAILABLE CREATE FUNCTION KEYS
This type represents a financial contract that grants its holder the right - but not the obligation - to enter in the future into a prespecified contract, referred to as the "underlying contract".
This voluntary act of entering into the underlying contract is called "exercising the option".
Option exercising is generally allowed only once on a date that is chosen by the holder out of a preagreed set of future dates, called "exercise dates".
The simplest case is that of a so called "vanilla european option", where there is only one possible "exercise date", meaning the holder must decide on that date whether or not to exercise the option.
The available exercise types are listed at Exercise Type
The "underlying contract" can be viewed as the purchase or sale of a prespecified Tradable (known as the option's "underlying"), in exchange of another Tradable (known as the option's "strike").
Often the strike is a fixed currency amount.
Examples of options are the widely traded stock and fx options that grant their holder the right to buy or sell a certain number of stock shares or currency units respectively.
In most cases, an option may be characterized as a call or a put depending on whether its payoff at exercise bestows the holder with a long or short position respectively relative to the underlying.
There are though more complex payoff types listed at Payoff Type
The options may also exhibit barriers of the types listed at Barrier Type