Abandonment Option

A clause granting parties the option of withdrawing from the contract before the fulfillment or completion of all contractual duties. This clause adds value by giving the parties the ability to end the obligation if it is unprofitable.

A type of "real option".

Abandonment options are commonly used in bilateral agreements without a set time frame for expiry. Usually, one party may decide to exit from the relationship without penalty.

An abandonment option often appears in contracts between financial planners and their clients.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Abandonment option — The option of terminating an investment earlier than originally planned. The New York Times Financial Glossary …   Financial and business terms

  • abandonment option — The option of terminating an investment earlier than originally planned. Bloomberg Financial Dictionary …   Financial and business terms

  • abandonment option — Fin the option of terminating an investment before the time that it is scheduled to end …   The ultimate business dictionary

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  • abandonment — controlling party giving up rights to property voluntarily. Bloomberg Financial Dictionary Allowing an option to expire unexercised. Also, withdrawal from a cancellable forward contract to purchase securities. Exchange Handbook Glossary * * *… …   Financial and business terms

  • abandonment — /ə bændənmənt/ noun an act of giving up voluntarily something that you own, such as an option or the right to a property …   Dictionary of banking and finance

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