Outright Option

An outright option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date. The buyer of the option pays a premium to the seller in exchange for this right.

Outright options are often used to speculate on the future price of an asset. For example, if you believe that the price of a stock will increase, you could buy a call option on that stock. If the price of the stock does increase, you can exercise the option and buy the stock at the strike price, which will be lower than the current market price. This will result in a profit for you.

Outright options can also be used to hedge against risk. For example, if you are worried that the price of a stock will decrease, you could buy a put option on that stock. If the price of the stock does decrease, you can exercise the option and sell the stock at the strike price, which will be higher than the current market price. This will limit your losses.

Outright options are a complex financial instrument and should only be used by investors who understand the risks involved.