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Home > QFINANCE Dictionary > Definition of index option

Definition of

index option

Stockholding & Investments

option to purchase shares in market index an option to purchase shares in a stock market index. This allows an investor to trade within a particular sector and eliminates some of the risk of investing in individual stocks.

index option - Related Articles

  • Employee Stock Options

    Best Practice

    All the options will vest if EPS growth over the vesting period is at least 30% more than growth in the retail prices index (excluding mortgage payments) (RPIX), and half the options will vest if EPS growth is at least 15% more than RPIX growth.
    By Peter Casson

  • Corporate Covenant and Other Embedded Options in Pension Funds

    Best Practice

    Two important options that the beneficiaries write to the pension fund are the indexation option and the pension put.
    By Theo Kocken

  • Derivatives

    Key Concepts

    Derivatives are powerful financial instruments with valuations based on the level of an underlying asset or a market index. Futures and options are commonly used forms of exchange-traded derivatives that offer tightly controlled, transparent clearing and settlement processes. However, over

  • Balancing Senior Management Compensation Arrangements with Shareholders’ Interests

    Best Practice

    no relation to anything an oil executive may have done. One potential solution is to benchmark the exercise price of executive stock options to the overall stock market or to a portfolio of firms in the firm’s industry—i.e. oil companies in this example. In practice, however, such indexed executive stock
    By Henrik Cronqvist

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Definitions of ’index option’ and meaning of ’index option’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’index option’ and other financial terms with our online QFINANCE Financial Dictionary.

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