An option transaction is a conditional forward transaction in which the buyer acquires an optional right (option) with respect to an underlying. Underlyings might be, for example, shares, bond futures or commodities. A distinction is made between an option to buy (a call option) and an option to sell (a put option). The buyer of a call option acquires the right to purchase the underlying at a future point in time at a predetermined price; the buyer of a put option acquires the contrary right to sell the underlying. However, the buyers can decide not to exercise this right if this seems more favourable. By contrast, the seller of a call or put option does not have the right to choose; as the option "writer", the seller must carry out the transaction if the buyer exercises his option. The buyer pays the writer a premium for the option when the contract is entered into. Buyers may use options to hedge against undesired movements in the price of the underlying (hedging) or to speculate on price movements (trading). The seller is primarily interested in collecting the premium. A distinction is made between exchange-traded options using standardised option contracts, and over-the-counter option transactions. With a "European option", buyers can exercise their optional right only at the end of the agreed term of the option transaction; with an "American option" this right can be exercised at any time during the term.