option pricing

An option states that it is a type of contract between two parties that provides one party the right, but not the obligation, to buy or sell the underlying asset at a predetermined price before or at expiration day. There are two major types of options: calls and puts.

• Call is an option contract that gives you the right, but not the obligation, to buy the underlying asset at a predetermined price before or at expiration day.
• Put is an option contract that gives you the right, but not the obligation, to sell the underlying asset at a predetermined price before or at expiration day.