What is an Option? A financial option is a contractual agreement between two parties, whereby the buyer of the option is granted the right, but not the obligation, to purchase or sell an asset at a pre-determined price (referred to as the strike price), during a specified period of time. The underlying asset can be a stock, bond, commodity, currency, or any other financial instrument. The contract typically represent 100 shares of the asset. Every option contract has a price that frequently changes based on three things: The price of the underlying asset (referred to as Delta)The time left on