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Option Contract
A contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.
Basis Risk
The risk that the price of a hedge and the asset being hedged will not move in perfect correlation.
Call Option
A financial arrangement granting the buyer the freedom, but not the duty, to acquire an asset such as a stock, bond, commodity, at a set price within an established timeframe.
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