CHAPTER 1
History of the Options Market
Before we delve into the history of options, it would be appropriate to look at the definition of an option.
Definition
Options are not financial instruments in themselves but are a financial derivative whose value is the underlying asset it represents. It represents a contract (an agreement) written by a seller (option writer) to a buyer (option holder), which offers the buyer the right but not the obligation to buy (call option) or sell (put option) a financial asset at a decided price (strike price) on a specific date (expiration date) in the future. In return for this right the option buyer pays a premium to the option writer.
A call option gives the buyer the right to buy an underlying asset in the ...
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