The seller chooses to buy or sell assets with unlimited losses. Including stocks, national debt, currency, stock index, commodity futures and so on. Options are derived from these subject matter, so they are called derivative financial instruments.

It is worth noting that the option seller does not necessarily own the underlying assets. Options can be "short". Option buyers may not really want to buy the underlying asset. Therefore, when the option expires, both parties do not have to make physical delivery of the subject matter, but only need to make up the price according to the price difference.

Extended data

The agreed expiration date of the option is called "expiration date". If an option can only be exercised on the expiration date, it is called a European option. If an option can be exercised at or before its expiration, it is called an American option.

Exercise of options. The purchase or sale of assets subscribed by option contracts is called "execution". The fixed price agreed in the option contract for the option holder to buy or sell the underlying assets is called the exercise price.

Baidu Encyclopedia-Options