What are silver options? Silver options, are like silver futures and silver forwards, derivative financial instruments or derivatives, but the buyers of silver options are unlike the case is with silver futures and silver forwards, under no obligation to exercise the silver options held or owned. A silver option therefore at best represents a right and not an obligation on the part of the buyer. It is a contract or agreement between two parties for a future transaction on silver at a reference price (strike or exercise price).

Let’s explain…

The buyer or purchaser of a silver option gains the right or option, but not the obligation, to participate or engage in a specific transaction to buy or sell silver in the future on a pre-determined date and at a reference price (strike or exercise price). This while the seller incurs or receives the corresponding obligation to fulfill the relevant transaction. Thus, if the buyer decides to exercise a silver option, the seller has an obligation to fulfill the transaction. It is not optional for the seller. When the option holder or buyer has the right to buy silver on a future date at a reference price (strike or exercise price), then it is called a “call option” or “call.” On the other hand, when an option grants the option holder or buyer the right to sell silver on a future date at a reference price (strike or exercise price), then it is called a “put option” or “put.”

Less hideous form of paper silver…

Silver options, unlike silver futures and silver forwards, although also used in silver market manipulation, are far less hideous forms of paper silver since the holder or buyer of silver options have the right or option to exercise the relevant silver options, but are under no obligation to do so. In fact, the original holder or buyer of silver options has the right to sell the relevant silver options to another party before the expiration date.

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