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ARTICLE · 20 JUNE 2016

The What, How and Why of put and call options

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Put and call options allow parties to enter into an agreement to sell or acquire land with minimum upfront commitment.

AustraliaReal Estate and Construction
Daniel Kentwell
Daniel Kentwell
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IN BRIEF

Put and call options are a useful way of allowing parties to enter into an agreement to sell or acquire land at a future point in time, requiring minimum upfront commitment. In the most simplistic of terms, rights granted under a put and call option are a future right to compel a seller to sell land (the "call option"), or a buyer to buy land (the "put option").

This article will cover some of the basic and common features of put and call options.

WHAT IS A CALL OPTION?

A call option is granted by a seller of land in favour of a buyer. It is an enforceable right that, when exercised by a buyer, requires the seller to sell the land the subject of the call option to the buyer.

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