How to Sign In
KnowNOW Blog for Finance
cancel
Showing results for 
Search instead for 
Did you mean: 
X
How Options Work
Cengage
92 Views
0 Comments

By Nivine Richie

Option contracts are agreements between a buyer (holder of the option) and a seller (writer of the option). The agreements give the holder the right to buy or sell an underlying asset at a predetermined strike price on or before a future expiration date. 

These contracts are effectively insurance contracts, and they are described in the video below.

For discussion:

In your own words, how are options similar to car insurance? How are they different?

How to add this post to your MindTap course