An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. A Grantor can also refer to the seller, or writer, of either call or put options contracts who collects the premiums for which the options are sold. Options are sold through exchanges to option holders who are responsible for the payment of premium.The use of options can be traced back to ancient Greece where maritime traders would use them as a form of insurance against losing their cargo in transit. Today, options are used by investors and traders as a way to hedge risk and speculate on price movements in securities and commodities markets around the world.There are two types of options: calls and puts. Calls give buyers the right to buy an asset at a specific price while puts give buyers the right to sell an asset at a precise price .Options can be exercised at any time before they expire. The holder of an option must pay premiums in order to receive these rights.It's important for investors and traders to understand how options work before investing money into them. Like all financial products, options come with risks that should be considered carefully before buying or exercising them.
