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An option is a financial derivative that represents a contract sold by one party to another. The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price (strike price) on a specific date (exercise date).

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An option is a financial derivative that represents a contract sold by one party to another. The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price (strike price) on a specific date (exercise date).

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