Financial options are those derivatives contracts in which the underlying assets are financial instruments such as stocks, bonds or an interest rate. The options on financial instruments provide a buyer with the right to either buy or sell the underlying financial instruments at a specified price on a specified future date. Although the buyer gets the rights to buy or sell the underlying options, there is no obligation to exercise this option. However, the seller of the contract is under an obligation to buy or sell the underlying instruments if the option is exercised. The paper provides a detailed description on how options are traded, as well as it reveals benefits and risks of options as financial instruments.

Ekonomija