a contract by which one party, the giver or holder, gives a sum of money, the premium or option money, to the other party, the taker, for the right (but not the obligation) to sell to him a certain quantity of a stated security during an agreed period at an agreed price, the striking price.
[...] The generation of additional capital or income may arise out of taking advantage of price imperfections or from the receipt of a premium for writing of covered call or covered put options (even if the benefit is obtained at the expense of the chance of yet greater benefit) or pursuant to stocklending as permitted by the FSA Regulations. [...]