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An option is a contract between a buyer and a seller, with terms that include an agreed-upon product (such as a stock), price, and timeframe. The option is issued as either a call (the right to buy) or a put (the right to sell) the stock. The buyer can execute the contract, and the seller must fulfill its terms. The buyer, known as "long," aims for the contract to increase in value. The seller, called "short," wants the contract to be worthless. Typically, one contract represents 100 shares and is traded on the exchange for a premium, which is the options price.
