FISCHER BLACK AND MYRON !%HOLES** INTRODUCTION THEOPTION CONTRACT is a right to buy or to sell another asset at a given price within a specified period of time. Warrants to purchase common stock, executive stock options, and put and call options are common examples of option contracts. Put and call option contracts will be the main interestâof this paper. The call option contract is the right to buy one hundred shares of a security at a fixed price, called the striking price, at any time up to the expiration of the contract, called its maturity date. The put contract is the right to sell one hundred shares of a security at the striking price up to the maturity of the contract. Other common contracts are combinations of puts and calls. For example, a straddle contract is the combination of one put and one call. The organizational structure of the current option market is described by Boness  and in detail in a recent study for the Chicago Board of Trade . The life of an option contract is usually measured in months so that the price of the contract, called the premium, is not affected by unexpected events
The Journal of Finance – Wiley
Published: May 1, 1972
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