What is "option"

Option \Op"tion\, n. [L. optio; akin to optare to choose, wish, optimus best, and perh. to E. apt: cf. F. option.]

1. The power of choosing; the right of choice or election; an alternative.

   There is an option left to the United States of America, whether they will be respectable and prosperous, or contemptible and miserable, as a nation.
   --Washington.

2. The exercise of the power of choice; choice.

   Transplantation must proceed from the option of the people, else it sounds like an exile.
   --Bacon.

3. A wishing; a wish. [Obs.]
   --Bp. Hall.

4. (Ch. of Eng.) A right formerly belonging to an archbishop to select any one dignity or benefice in the gift of a suffragan bishop consecrated or confirmed by him, for bestowal by himself when next vacant; -- annulled by Parliament in 184

5. 5. (Stock Exchange) A stipulated privilege, given to a party in a time contract, of demanding its fulfillment on any day within a specified limit; also, the contract giving that privelege; as, an option to buy a stock at a given price; to exercise an option.

   Note: A person owning a stock may sell to another person an option or right to buy that stock at some specified price within a specified period of time, and in return will get a premium in consideration for giving the option. If the option price (the strike price) is above the market value for the entire period in which the option is valid, the option is typically not exercised, and expires with no need on the part of the stock owner to transfer the actual stock itself. If however the stock price rises above the option price, the holder of the option may exercise the option, and buy the stock at the specificed price, and may in turn resell the stock at the current market value, perhaps making a net profit on the transaction. The original holder of the stock will receive, in addition to the price at which the stock is sold, the price of the option, and will generally receive more money than if the stock itself were sold at the time that the option was sold. The actual profits for the transaction will depend on the fees that brokers charge for conducting the sales of options and stocks.

   Buyer's option, an option allowed to one who contracts to buy stocks at a certain future date and at a certain price, to demand the delivery of the stock (giving one day's notice) at any previous time at the market price.

   Seller's option, an option allowed to one who contracts to deliver stock art a certain price on a certain future date, to deliver it (giving one day's notice) at any previous time at the market price. Such options are privileges for which a consideration is paid.

   Local option. See under Local.

   Syn: Choice; preference; selection.

   Usage: Option, Choice. Choice is an act of choosing; option often means liberty to choose, and implies freedom from constraint in the act of choosing.

c.1600, "action of choosing," from French option (Old French opcion), from Latin optionem (nominative optio) "choice, free choice, liberty to choose," from root of optare "to desire, choose," from PIE root *op- (2) "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 North American football play, it is recorded from 1954.

n. One of the choices which can be made. (from the 19th c) vb. To purchase an option on something. (from the 20th c)

1. n. the right to buy or sell property at an agreed price; the right is purchased and if it is not exercised by a stated date the money is forfeited

2. one of a number of things from which only one can be chosen; "what option did I have?"; "there no other alternative"; "my only choice is to refuse" [syn: alternative, choice]

3. the act of choosing or selecting; "your choice of colors was unfortunate"; "you can take your pick" [syn: choice, selection, pick]

In the film industry, an option is a contractual agreement between a potential film producer (such as a movie studio, a production company, or an individual) and a writer or third party holding ownership of a screenplay.

Option (オプション, Opushon in katakana and subtitled Exciting Car Magazine) is an automotive magazine founded by Daijiro Inada in 1981, to meet the demand for enthusiasts of modified Japanese cars in Japan.

The magazine is published by the Japanese media giant San-Ei Shobo Publishing Co. Ltd., the parent company of Sunpros, a company owned by Inada, who is behind both the D1 Grand Prix series and Tokyo Auto Salon.

Option may refer to:

Option (subtitled Music Alternatives, then Music Culture) was a music magazine based in Los Angeles, California. It covered independent, underground and alternative music and multiple musical genres for an international subscription base. Its print run began in 1985 and ended in 1998.

In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on 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.

The owner of an option may on-sell the option to a third party in a secondary market, in either an over-the-counter transaction or on an options exchange, depending on the option. The market price of an American-style option normally closely follows that of the underlying stock, being the difference between the market price of the stock and the strike price of the option. The actual market price of the option may vary depending on a number of factors, such as a significant option holder may need to sell the option as the expiry date is approaching and does not have the financial resources to exercise the option, or a buyer in the market is trying to amass a large option holding. The ownership of an option does not generally entitle the holder to any rights associated with the underlying asset, such as voting rights or any income from the underlying asset, such as a dividend.

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.