oboloo Glossary

Option Contracts

oboloo Glossary

Option Contracts

Option contracts are agreements between two parties that give one party the right, but not the obligation, to buy or sell an underlying asset at a pre-determined price within a specified period of time. Option contracts can be used as a hedging strategy to reduce risk and increase flexibility in complex financial transactions. They provide a way to lock in a certain price when market conditions are uncertain. By granting the ability to buy or sell an asset without any upfront costs or obligations, option contracts can be a great tool for companies looking to maximize returns or minimize losses.