Cntract

Option contracts involve the right to buy or sell an underlying asset at a specified price (striking price). They can be exercised up to the expiration date. American options can be exercised anytime before expiration while European options can only be exercised on the expiration date. Options differ from futures contracts in that buyers of futures are obligated to buy/sell while owners of options have the right but not obligation. Options and futures also differ in payment structure. Option contracts have standardized quotes and typically represent 100 shares of stock.