Task: Class Definition Understanding (ontology: Business_Finance/Financial_Industry_Business_Ontology)

Which of the following definitions best describes 'option'?

A. derivative instrument that is a privately held, negotiable bilateral contract traded over-the-counter (OTC) between two parties in a creditor/debtor relationship, enabling the creditor to effectively transfer some or all of the risk of a debtor defaulting to a third party
B. derivative instrument that grants to the holder either the privilege to purchase or the privilege to sell the assets specified at a predetermined price or formula at or within a time period in the future
C. option giving the buyer (holder) the right, but not the obligation, to buy the assets specified at a fixed price or formula, on or before a specified date
D. derivative instrument whose underlier is based on a security, including collections of securities and indices based on securities

Answer: derivative instrument that grants to the holder either the privilege to purchase or the privilege to sell the assets specified at a predetermined price or formula at or within a time period in the future