American options are contracts that give buyers the right, but not the obligation, to buy or sell a specified product at a specified price on or before a specified date. Options have been written for numerous products such as gold, wheat, tulip bulbs, foreign exchange, movie scripts, and stocks.1 For example, an owner of gold might sell an option that gives the buyer the right to purchase the gold anytime in the next 30 days at a specified price. The buyer does not have to exercise that right; but if the buyer does, then the seller must sell the gold. An interesting recent example involving airline tickets can be found in .
KeywordsStock Price Option Price Call Option Expiration Date Fair Price
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