Option Contract Sample | Download Free Template

What is Option Contract?

An option contract is an agreement between two parties to facilitate a potential transaction on the underlying security at a preset price, referred to as the strike price, prior to the expiration date. The best suited examples of optional contract sample is  in fields which may be needed with respect to physical commodities or financial instru-ments like equity stocks/bonds etc. It is an agreement between the buyer and seller, where the buyer gets the right to buy assets at a predetermined price and date from the seller.

Why is it important ?

It should be noted that an option contract can be of two types:- "Call Option contract" and a "Put option contract”. In a nutshell, Option contracts are an important tool which give traders the opportunity to surround their stock positions. These allow for a leveraged position on a stock, while mitigating the risk of the full purchase. An option contract template consists of at least four components: size, expiration date, strike price, and premium .

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