
254 Derivatives and Risk Management
C H A P T E R S U M M A R Y
An options contract provides the right to buy or sell a
speci ed asset at a xed price for a xed length of time.
In the case of futures and forward contracts, both the
buyer and the seller have obligations to ful l, whereas in an
options contract, the buyer of the option has the right and
not the obligation to ful l the contract.
A call option gives the buyer the right to buy the underlying
security at a xed price at a future time.
A put option gives the buyer the right to sell the underlying
security at a xed price at a future time. ...