Trader Resources : Options Markets Basics : Defining Options Markets
An option is the right, but not the obligation, to buy or sell a futures contract at some predetermined price at any time within a predetermined time period.

Understanding a few key terms is crucial to understanding how options markets work:

• Call Option - An option to buy, or long, a futures contract.
• Put Option - An option to sell, or short, a futures contract.
• Writer - Option seller. This person is assigned a long position.
• Holder - Option buyer. This person is assigned a short position.
• Strike Price - Predetermined price at which an option can be exercised.
• Premium - The amount paid for an option.

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