Simply put, an option is like a prepaid dis-counted voucher that gives the right to buy or sell the underlying asset at a fixed price, with a maturity date. This allows investors to make a profit if the price moves in their favour.
SINGAPORE (Oct 14): The concept and use of financial options have existed for centuries. One of the earliest documented option trades is found in Aristotle’s fourth-century BC book, Politics, in which he documents how Thales of Miletus profited from a plentiful olive harvest by using an options contract.
Anatomy of an option
