An option is the right but not the obligation to buy or sell a risky asset at a stated fixed price at a specified price during a certain period of time or on a specific date. An option is a financial instrument that allows making a bet on rising or falling values of an underlying asset. The underlying asset typically is a stock, stock index, treasury securities, and exotic currency. Since the value of an option depends on the value of the underlying asset, option and other related financial instruments are called derivatives. An option is an agreement between two parties about trading the asset at a certain future time. One party is the writer (or seller) who fixes the terms of the option contract and sells the option. The other party is the holder (or buyer) who purchases the option. Since the option gives the holder a right and the seller an obligation, the buyer has received something of value. The amount the buyer pays the writer for the option is called the option premium. Options have a limited life time. The maturity date T fixes the time horizon. At this date the rights of the holder expire, and for late times(t > T) the option is worthless. There are two basic types of option: The call option gives the holder the right to buy the underlying for an agreed price K by the date T. The put option gives the holder the right to sell the underlying for the price K by the date T. The previously agreed price K of the contract is called strike price (or exercise price).