What term describes the holder and owner of an options contract?

The term that accurately describes the holder and owner of an options contract is the option buyer. This individual has the right, but not the obligation, to buy or sell the underlying asset at a predetermined price within a specified time frame. The option buyer pays a premium for this right when purchasing the contract.

Understanding the role of the option buyer is important because they hold the potential to benefit from favorable movements in the asset's price without the obligation to execute the transaction. In contrast, the other terms refer to different roles within the options market: the option seller, also known as the option writer, is the one who creates and sells the contract, taking on the obligation if the option is exercised. An option trader is a more general term that could refer to anyone engaged in the buying and selling of options, not specifically the holder of a contract.

Grasping these distinctions helps clarify the dynamics of options trading and the specific rights and responsibilities associated with being an option buyer.