option contract
agreement which allows one party to choose whether or not to participate in the agreement
Option contract
An option contract is defined as "a promise which meets the requirements for the formation of a
contract and limits the promisor's power to revoke an offer." Restatement (Second) of Contracts § 25 (1981).Quite simply, an option contract is a type of contract that protects an offeree from an offeror's ability to revoke the contract.
Consideration for the option contract is still required as it is still a form of contract. Typically, an offeree can provide consideration for the option contract by paying money for the contract or by rendering other performance or forbearance. See
consideration for more information.
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Options contract
Option contract
A unilateral contract giving the buyer the right, but not the obligation, to buy or sell a commodity, or a futures contract, at a specified price within a certain time period. It is unilateral because only one party (the buyer) has the right to demand performance on the contract. If the buyer exercises his right, the seller (writer or grantor) must fulfill his obligation at the strike price, regardless of the current market price of the asset.
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