Abstract
A ‘European-type call (put) option’ is a security that gives its owner the right to buy (sell) a specified quantity of a financial or real asset at a specified price, the ‘exercise price’, on a specified date, the ‘expiration date’. An American-type option provides that its owner can exercise the option on or before the expiration date. If an option is not exercised on or before the expiration date, it expires and becomes worthless.
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© 1989 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Merton, R.C. (1989). Options. In: Eatwell, J., Milgate, M., Newman, P. (eds) Finance. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20213-3_23
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DOI: https://doi.org/10.1007/978-1-349-20213-3_23
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