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Option contract (non-transferable) | Free template

Option contract is a free template to establish a contract between an issuer and a purchaser about a future trade at a specified price where the issuer is obliged to complete the trade if the buyer requests so while the buyer has a right to complete the transaction.

An option contract means that the buyer purchases an option from the issuer to buy something in the future at a predetermined price. An option contract may relate to financial instruments, commodities, other goods or services. An option contract may apply to the right of purchase, call option, or the right to sell something, put option.

In an option agreement is the issuer's name, the buyer's name, underlying asset, quantity, strike price, exercise date, the size of the option premium and other terms specified. An option has value as determined by the difference between the exercise price and the market price of the underlying asset and the period up to the exercise date. A positive difference between the exercise price and the market price represents a real value and the volatility of the price of the underlying asset and the time to the exercise date represents a time value.

The fact that there is a value of an option means that the issuer usually wants to be compensated by the buyer in the form of an option premium. The premium can be determined using the Black-Scholes model for valuing stock options. The issuer and the buyer will agree on the size of the option premium and it is paid to the issuer, who thereby is receiving compensation for selling a right to the buyer.

A buyer of an option may wish to write an option contract to minimize risk, the buyer knows what price he can buy or sell for. An issuer may wish to sign an option agreement to earn money on an asset he owns, which he believes will have a constant price over a period ahead.

You can use this template for an option contract to create a non-transferable agreement on a future transaction in which the buyer has a right and the issuer an obligation to complete the contract if the buyer requests it.
Updated: 01-01-2015 | Created by All-templates.biz

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Tags: agreement contract law