1. Definition of Stock Option:
   • A stock option is a financial instrument that gives the investor the right to buy (or sell) shares at a specific price.
2. Common Terminology:
   • The specific price at which the investor can buy (or sell) the shares is known as the "strike price."
3. Correct Term:
   • "Spare price" and "market price" are not terms used in this context. "Strike price" is the correct term.
     Thus, the completed paragraph should read:
     "A stock option is a purchased contract that gives the investor the right to buy 100 shares of stock at the strike price by the expiration date."

Supplemental Knowledge

Stock options are financial instruments that grant investors the right - but not obligation - to buy or sell stocks within an agreed-upon time period at predetermined prices and conditions. Understanding their terminology and mechanics are paramount if investors intend on taking full advantage of stock options as part of their investing strategies.

Key Concepts:

1. Strike Price:
   • The strike price (or exercise price) is the fixed price at which the holder of an option can buy (call option) or sell (put option) the underlying stock.
   • This price is set when the option contract is created and remains constant throughout the life of the option.
2. Market Price:
   • The market price is the current trading price of the stock in the open market.
   • It fluctuates based on supply and demand dynamics.
3. Expiration Date:
   • The expiration date is the last date on which an option can be exercised.
   • After this date, the option becomes void and worthless if not exercised.

From Concepts to Reality

Imagine you're an investor betting on an increase in value of one company's stock over time. By purchasing call options with strike prices lower than your anticipated future market price, you could potentially acquire shares at discounted prices--maximizing potential profit if your prediction holds true!

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