Seller's option


Also found in: Dictionary, Acronyms.

Seller's option

Seller's Option Contract

A contract between a buyer and a seller where the seller has the ability to delay settlement of the contract beyond the normal time. A seller may exercise this option if he/she has difficulty in making delivery on the contract for any reason at all. The farthest possible settlement date is stated in the seller's option contract. This contrasts with a cash contract, where settlement is made before the regular settlement date.
References in periodicals archive ?
The current FAR/Bar contract default clause reads as follows: "If Buyer fails to perform this Contract within the time specified, including payment of all deposits, the deposit(s) paid by Buyer and deposit(s) agreed to be paid, may be recovered and retained by and for the account of Seller as agreed upon liquidated damages, consideration for the execution of this Contract and in full settlement of any claims; whereupon, Buyer and Seller shall be relieved of all obligations under this Contract; or Seller, at Seller's option, may proceed in equity to enforce Seller's fights under this Contract."
A trader wanting only to capture the dividend could eliminate the risk that the stock price declines (apart from the dividend) by selling the stock "seller's option" for settlement after the record date.
"There is all too often small print in contracts that virtually allows the milk buyers to change the rules as and when they want, as well as putting severe limitations on the seller, not least of all in limiting the seller's options to exit the contract,'' he said.