option,n.1. The right or power to choose; something that may be chosen <the lawyer was running out of options for settlement>.2. An offer that is included in a formal or informal contract; esp., a contractual obligation to keep an offer open for a specified period, so that the offeror cannot revoke the offer during that period <the option is valid because it is supported by consideration>. — Also termed option contract; (redundantly) time option. See irrevocable offer under OFFER. [Cases: Contracts  16; Vendor and Purchaser  18. C.J.S. Contracts §§ 37–41, 44, 46, 55–56, 58; Vendor and Purchaser§§ 98, 115.] 3. The right conveyed by such a contract <Pitts declined to exercise his option to buy the house>.4. The right (but not the obligation) to buy or sell a given quantity of securities, commodities, or other assets at a fixed price within a specified time <trading stock options is a speculative business>. Cf. FUTURES CONTRACT . [Cases: Commodity Futures Trading Regulation  10; Corporations  116; Securities Regulation  5.25(3). C.J.S. Corporations §§ 233–240, 242; Securities Regulation §§ 28–29, 455, 470.]

American option.An option that can be exercised on any day, including its expiration date. — Also termed American-style option. Cf. European option.

call option.An option to buy something (esp. securities) at a fixed price even if the market rises; the right to require another to sell. — Often shortened to call. [Cases: Commodity Futures Trading Regulation  10; Securities Regulation  5.25(3). C.J.S. Securities Regulation §§ 28–29,

455, 470.]

cash-value option.The right of a life-insurance policyholder to surrender the policy for its cash value at a specified time or at any time. [Cases: Insurance  1950, 2037. C.J.S. Insurance §§

518–519, 742–745, 749–754.]

commodity option.An option to buy or sell a commodity. [Cases: Commodity Futures Trading Regulation  10. C.J.S. Securities Regulation §§ 455, 470.]

European option.An option that can be exercised only on its expiration date. — Also termed European-style option. Cf. American option.

futures option.An option to buy or sell a futures contract. [Cases: Commodity Futures

Trading Regulation  10. C.J.S. Securities Regulation §§ 455, 470.]

naked option.A call option that grants another the right to buy stock even though the option-giver does not own the stock to back up that commitment. — Also termed uncovered option.

nonforfeiture option.A policyholder’s option, upon the lapse of premium payments, to continue an insurance policy for a shorter period than the original term, to surrender the policy for its cash value, to continue the policy for a reduced amount, or to take some other action rather than forfeit the policy. [Cases: Insurance  2037. C.J.S. Insurance §§ 518–519, 742–745, 749–754.]

option to purchase real property.A contract by which an owner of realty enters an agreement with another allowing the latter to buy the property at a specified price within a specified time, or within a reasonable time in the future, but without imposing an obligation to purchase upon the person to whom it is given. [Cases: Vendor and Purchaser  18. C.J.S. Vendor and Purchaser §§ 98,

115.]

put option.An option to sell something (esp. securities) at a fixed price even if the market declines; the right to require another to buy. — Often shortened to put. [Cases: Commodity Futures Trading Regulation  10; Corporations  116; Securities Regulation  5.25(3). C.J.S.

Corporations §§ 233–240, 242; Securities Regulation §§ 28–29, 455, 470.]

seller’s option.A special stock-exchange transaction that gives the seller the right to deliver

the security within a specified period, usu. 5 to 60 days.

settlement option.Insurance. A life-insurance-policy clause providing choices in the method of paying benefits to a beneficiary, as by lump-sum payment or periodic installments. [Cases:

Insurance  2443, 3402. C.J.S. Insurance § 1194.] stock option.See STOCK OPTION. uncovered option.See naked option.

5.Hist. Eccles. law. The requirement that a newly elected bishop convey to the archbishop the right to fill the next vacant ecclesiastical benefice in the new bishop’s see.

option,vb. To grant or take an option on (something) <Ward optioned his first screenplay to

the studio for $50,000>.

[Blacks Law 8th]