1 The right to buy 100 shares of a stock (or stock index, etc ) at set price Usually, the option holder has the right, but not the obligation to purchase the property The option expires at a set time For example, the current price of Madison Inc is $50 For $5 per share you can purchase a option that allows you to buy Madison stock at $52 at anytime within the next 60 days Traded options expire at preset times 2 The right to prepay a mortgage