Buyer's Option

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Dictionary Says

Definition of 'Buyer's Option'

In commercial contracts, an agreement between a vendor and a buyer that defines price and specifications over a specified time period for a product, but does not stipulate the quantity of the product that the buyer is obligated to purchase. In the auction industry, when multiple units of a product are being auctioned off, "buyer's option" refers to the right given to the winner of the auction of the first unit, to purchase any or all additional units at the winning bid price. 
Investopedia Says

Investopedia explains 'Buyer's Option'

The buyer's option is advantageous to the buyer, who can choose to buy a greater or smaller quantity of product at a fixed price, depending on market conditions. However, it is detrimental to the manufacturer or supplier, since revenues from product sales cannot be estimated accurately. The manufacturer should, therefore, ensure that a supply agreement cannot be construed as a buyer's option contract. This can be achieved by simply specifying in the contract the fixed quantity of product that the buyer is obligated to buy.
Search results for

'Buyer's Option'

  • How do I use a "basket" option?

    http://www.investopedia.com/ask/answers/08/basket-option.asp
    ... currency. The buyer chooses the maturity of the option, the foreign currency
    amounts for the basket and the aforementioned strike price. ...

  • Getting Acquainted With Options Trading

    http://www.investopedia.com/articles/optioninvestor/03/073003.asp
    ... The option buyer's gain is the option seller's loss and vice versa: any payoff diagram
    for an option purchase must be the mirror image of the seller's payoff ...

  • Exotic Options: A Getaway From Ordinary Trading

    http://www.investopedia.com/articles/optioninvestor/07/exotic-options.asp
    ... incrementally with each rise in the underlying assets price above the strike, this
    option provides the buyer with a finite lump sum at that point and beyond. ...

  • Write Covered Calls To Increase Your IRA Income

    http://www.investopedia.com/articles/optioninvestor/09/write-covered-calls-increase-income.asp
    ... If the price were to rise to $55, the buyer would exercise the option and buy the
    shares from Harry for $40, when they are worth $55 in the market. ...

  • Housing Cooperatives: A Unique Type Of Home Ownership

    http://www.investopedia.com/articles/pf/08/housingco-op.asp
    ... Additional expenses include monthly utility bills for each buyer's residence, which
    are paid on an ... as New York City, co-ops may be an attractive option from a ...

  • Rent To Own; Own To Rent

    http://www.investopedia.com/articles/mortgages-real-estate/09/real-estate-purchase-options.asp
    ... option expires and any option money is kept by the seller. The buyer can
    sell the option to somebody else if allowed by the contract. ...

  • Cut Commissions With "For Sale By Owner" Sales

    http://www.investopedia.com/articles/mortgages-real-estate/08/for-sale-by-owner.asp
    ... Make sure you chose an option that gives your home adequate exposure and includes
    at least ... on the MLS is the commission you're willing to pay the buyer's agent ...

  • RRSPs: Withdrawals | Investopedia

    http://www.investopedia.com/university/rrsp/rrsp7.asp
    ... Those who choose this option are given a 15-year period to pay back the ... The Home
    Buyer's Plan makes sense because of the huge amount of interest that must be ...

  • The Ins And Outs Of Seller-Financed Real Estate Deals

    http://www.investopedia.com/articles/mortgages-real-estate/10/should-you-use-seller-financing.asp
    ... will accept a down payment that is lower than what the buyer would be ... are also a
    few potential problems to consider when investigating the option of using ...

  • Selling Your House? Avoid These Mistakes

    http://www.investopedia.com/articles/mortgages-real-estate/08/home-seller-mistakes-selling-house.asp
    ... you're in a buyer's market or a seller's market and on how well you have staged
    your home. Mistake No.6 - Selling in Winter (When You Have the Option Not To ...

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