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Finance Dictionary and Glossary of Investment Terms
index option
Definition 1.
An option whose underlying security is an index. If exercised, settlement is made by cash payment, since physical delivery is not possible.
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Definition 2.
A call or put option on a financial index.
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Definition 3.
A call or put option based on a stock market index.
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Definition 4.
An option on a stock index, usually the Standard & Poor''s 500. Basically, these are a way to bet on the direction of the market. They can also be used to hedge against risk. Options on market-sector indexes are also available.
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