Options
An option contract gives the holder a right, but not an obligation, to buy or sell an underlying asset on or before a specified date1. It includes a warrant, which is an instrument entitling the holder to subscribe for shares or securities of a company. An option does not include an agreement which is to be settled in cash, without delivery of any property; such an agreement is a contract for differences2. However, a contract which provides for delivery of a foreign currency is within the definition of an option—the currency is the property to be delivered, not the means of payment3.
The underlying subject matter of an option is the property which would fall to be delivered on exercise of the option; if that property is a derivative contract it is the underlying subject matter of that contract4. The fact that some
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Web page updated on 17 Mar 2025 16:56