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FINDLAW LEGAL DICTIONARY

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Option

option n

1

: the power or right to choose
;also
: a choice made or available
2 : a privilege of demanding fulfillment of a contract on any day within a specified time
3 : a contract conveying in exchange for the payment of a premium a right to buy or sell designated securities, commodities, or interests in property at a specified price during a stipulated period
;also
: the right conveyed by such a contract [decided to exercise his ]

call option
: an option to buy at a fixed price at or within a certain time compare put option in this entry

covered option
: an option in which the optionor owns the security or commodity to be conveyed under the option compare naked option in this entry

futures option
: an option on futures

in·cen·tive stock option
[in-sen-tiv-]
: a stock option granted by a corporation to its officers and employees as supplementary compensation that is subject to special tax treatment under the Internal Revenue Code

index option
: an option on a stock index

naked option
: an option in which the optionor does not own the security or commodity and will have to purchase it at market price if the optionee decides to exercise the option compare covered option in this entry

put option
: an option to sell for a fixed price at or within a specified time

stock option
: an option giving the optionee the right to purchase a specified number of shares of stock from a corporation at a specified price at or within a specified time see also incentive stock option in this entry
4 : a right of an insured to choose the form in which various payments due him or her on a policy shall be made or applied

dividend option
: an option allowing the owner of a participating insurance policy and esp. a life insurance policy to determine how dividends are to be paid (as in cash or by being applied as payment for additional insurance)

installments-for-a-fixed-amount option
: a settlement option in which the insurer retains the policy proceeds and makes periodic payments of a fixed amount until the proceeds are exhausted called also fixed amount option

installments-for-a-fixed-pe·ri·od option
: a settlement option in which the policy proceeds are retained by the insurer and paid in installments over a fixed period of time called also fixed period option

interest-only option
: a settlement option in which the insurer retains the policy proceeds and makes interest payments at a guaranteed minimum rate

joint-and-last-survivorship option
: an option in which the insurer makes periodic payments to two or more persons (as a husband and wife) of the proceeds or usually cash value of a policy until the death of the last survivor

life income option
: a settlement option in which the insurer retains the policy proceeds and makes periodic payments for the beneficiary's life or for a specified number of years even after the beneficiary's death with payments to a different recipient

non·for·fei·ture option
[nÄ n-fȯr-fə-chr-]
: an option (as to surrender the policy for its cash value or convert the policy to one with a smaller face amount or to a term policy with a shorter period) available to a policyholder who has ceased paying premiums

settlement option
: an option to receive payments of the proceeds of a life insurance policy other than by lump sum
vt : to grant or take an option on [started buying or ing riverfront land "Rita Koselka"]



Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.