Seller's Option

The right of a forward contract seller to choose some of the specifications of a commodity to be delivered. The choices about the delivered commodity's quality and delivery specifications must fit among the limits imposed by the terms of the contract.

Seller's option can also refer to a put option.

For some commodities, such as rice and oil, collecting suitable amounts of a commodity and providing the transportation can be a very complicated process. For example, a contract for corn can represent 5,000 bushels. Since hedgers tend to buy large numbers of contracts at a given time, a forward contract seller might have to deliver hundreds of thousands of corn bushels during one delivery. Giving contract sellers a little bit of leeway can alleviate some of the difficulties involved with delivery logistics.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Seller's option — Option Op tion, n. [L. optio; akin to optare to choose, wish, optimus best, and perh. to E. apt: cf. F. option.] 1. The power of choosing; the right of choice or election; an alternative. [1913 Webster] There is an option left to the United… …   The Collaborative International Dictionary of English

  • seller's option — The option of a seller of a commodity upon an exchange to deliver the same at any time within a month. Pixley v Boynton, 79 Ill 351. The option of the vendor in a contract of sale of personalty to accept money or something else of equivalent… …   Ballentine's law dictionary

  • seller's option — noun : an option allowed to one who contracts to sell stocks to make delivery within a specified period usually not less than five business days nor more than 60 days after the date of the contract * * * (on the New York Stock Exchange) a special …   Useful english dictionary

  • seller's option — (on the New York Stock Exchange) a special transaction that gives the seller the right to make late delivery of a security within a specified period, ranging from 5 to not more than 60 business days for stocks. [1930 35] * * * …   Universalium

  • seller's option — delayed settlement/delivery in a transaction. Bloomberg Financial Dictionary …   Financial and business terms

  • Option — Op tion, n. [L. optio; akin to optare to choose, wish, optimus best, and perh. to E. apt: cf. F. option.] 1. The power of choosing; the right of choice or election; an alternative. [1913 Webster] There is an option left to the United States of… …   The Collaborative International Dictionary of English

  • option of equivalent value — See seller s option …   Ballentine's law dictionary

  • Seller financing — is a loan provided by the seller of a property to the buyer, to cover part or all of the sale price. This process, also known as owner carry back or owner financing, is used in a variety of situations as a creative financing option. Examples are… …   Wikipedia

  • Option writer — Option seller. The New York Times Financial Glossary * * *    An institution or individual that sells an option and thereby commits to buy or sell the underlying at a predetermined strike price in exchange for the premium paid by the option… …   Financial and business terms

  • seller — A person who takes a short futures position or grants (sells) a commodity option. An option seller is also called a marker, grantor, or granter, or writer. Chicago Mercantile Exchange Glossary ( option) seller/grantor/writer Also known as the… …   Financial and business terms

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