financial contracts known as options. In essence, the buyer of a call option has the right, but not the obligation, to buy an agreed quantity of a particular commodity or financial asset from the seller {'writer'} of the option at a certain time {the expiration date} for a certain price {known as the strike price}. Clearly, the buyer of a call option expects the price of the commodity or underlying instrument to rise in the future. When the price passes the agreed strike price, the option is 'in the money' - and so is the smart guy who bought it. A put option is just the opposite: the buyer has the right, but not the obligation, to sell an agreed quantity of something to the seller of the option.
( Niall Ferguson )
[ The Ascent of Money: A ]
www.QuoteSweet.com