A contract that gives its owner the right to buy (call option) or sell (put option) a stock index at a fixed value until a specified date. Options work exactly like regular stock options, except that an index rather than a particular stock is the underlying asset. As with stock index futures, delivery must be in cash, because it is not possible to deliver an index.

More On This Topic

Link to This Definition
Did you find this definition of STOCK INDEX OPTION helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary