According to a definition of the Federal Court of Justice of 22 October 1994, an share option is described as follows: The content of a share option is the acquisition or sale of the right to either buy from or sell to the counterparty (writer) a certain number of securities of a certain type of shares admitted to trading in shares (underlying) at any time during the term or at a certain time of the option at a price agreed in advance. The buyer pays the option price for this right.

In principle, there are four basic positions for share options:

(1) Purchase of a call option
(2) Sale of a call option
(3) Purchase of a put option
(4) Sale of a put option

The buyer of a call option (1) or put option (3) has the possibility within the option term, depending on the price development of the underlying asset on which the option transaction is based (share, index, futures contract, currency), to exercise the option or to waive the exercise by accepting a loss in the amount of the option price. Furthermore, the option buyer has the option to sell his/her option on the market again during the term. If the price expectations of the buyers of call and put options do not materialise within the option term, the loss arising from this transaction is limited to the option price. Reversed price expectations exist for the sellers of call (2) or put (4) options. The seller of a call or put option must act as writer when exercising the option, i.e. deliver or acquire the corresponding shares. If the option holder lets the option period expire without declaring the exercise of the option, the option expires without compensation.