What is a share option?

A share option is an option on an individual share, such as an option on the share of Philips or Anheuser-Busch Inbev. This option gives the holder the right, but not the obligation, to buy or sell the share at a predetermined price (exercise price) within a certain period.

Share options are important instruments in the financial world, used for speculation or risk management.

Understanding this term requires insight into the broader context of options and the market mechanisms in which they function.