Index Option

Options and Derivatives Strategy & Education Financial Terms Dictionary

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Index options are options contracts that use a benchmark index or a futures contract based on that index as the underlying instrument.

Index options are usually European style and are paid in cash at the value of the index at expiration.
Like all options, index options give the buyer the right, but not the obligation, to go long (for a call) or short (for a put) the value of the index at a predetermined strike price.