Option Legal Meaning and Definition

Here is a simplified definition of the legal term Option.

Option (noun)

An option is a legal agreement in which a person pays a specific amount to acquire the right but not the obligation, to buy or sell a particular object or asset, such as stocks, real estate, or commodities. This transaction is done at a predetermined price, within a certain timeframe. It's important to note that an 'option' itself is a form of contract and offers the buyer the ability to choose whether or not to complete the transaction.