OPTION

Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date. Investors , not companies, issue options. Investors who purchase call options bet the stock will be worth more than the price set by the option (the strike price ), plus the price they paid for the option itself. Buyers of put options bet the stock's price will go down below the price set by the option. An option is part of a class of securities called derivatives , so named because these securities derive their value from the worth of an underlying investment.