# Covered Option Agreement
**This Covered Option Agreement ("Agreement") is made and entered into as of [Insert Date] by and between:**
**1. Option Grantor:**
Name: [Grantor's Name]
Address: [Grantor's Address]
Email: [Grantor's Email]
Phone: [Grantor's Phone Number]
**2. Option Holder:**
Name: [Holder's Name]
Address: [Holder's Address]
Email: [Holder's Email]
Phone: [Holder's Phone Number]
**Recitals:**
A. The Option Grantor is the owner of [Insert Description of the Underlying Asset, e.g., shares of a stock, commodities, etc.].
B. The Option Holder desires to purchase an option to buy [Insert Quantity] of the underlying asset at a specified price.
C. The parties wish to define the terms, conditions, and limitations of this covered option contract.
**NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties agree as follows:**
## 1. Definitions
1.1 **Covered Option**: An option that is backed by an equivalent quantity of the underlying asset owned by the Grantor.
1.2 **Strike Price**: The price at which the Option Holder can buy the underlying asset, defined as [Insert Strike Price].
1.3 **Expiration Date**: The date on which the option will expire, defined as [Insert Expiration Date].
## 2. Grant of Option
2.1 The Option Grantor hereby grants to the Option Holder the exclusive right to purchase up to [Insert Quantity] of the underlying asset at the Strike Price, subject to the terms of this Agreement.
2.2 This option may be exercised by the Option Holder in whole or in part at any time before or on the Expiration Date.
## 3. Exercise of Option
3.1 The Option Holder must provide written notice to the Option Grantor to exercise the option at least [Insert Number] days prior to the Expiration Date.
3.2 Upon exercising the option, the Option Holder shall pay the Strike Price to the Option Grantor. Payment shall be made within [Insert Number] business days following exercise.
## 4. Representations and Warranties
4.1 **Option Grantor Representations**: The Option Grantor represents and warrants that they are the legal owner of the underlying asset, free from any liens and encumbrances.
4.2 **Option Holder Representations**: The Option Holder acknowledges that they have had the opportunity to consult with financial and legal advisors prior to entering this Agreement.
## 5. Indemnification
Each party (the "Indemnifying Party") shall indemnify and hold harmless the other party (the "Indemnified Party") from any loss, liability, claim, expense, or demand arising from any breach of this Agreement or the Indemnifying Party's negligent acts or omissions.
## 6. Termination
This Agreement shall terminate on the Expiration Date unless extended by mutual written consent of both parties.
## 7. Miscellaneous
7.1 **Governing Law**: This Agreement shall be governed by and construed in accordance with the laws of the State of [Insert State].
7.2 **Entire Agreement**: This Agreement constitutes the entire understanding between the parties regarding the subject matter hereof and supersedes all prior agreements or understandings.
7.3 **Amendments**: This Agreement may only be amended in writing signed by both parties.
7.4 **Severability**: If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.
**IN WITNESS WHEREOF**, the parties have executed this Covered Option Agreement as of the date first above written.
______________________________
**[Grantor's Name]**
Option Grantor
______________________________
**[Holder's Name]**
Option Holder
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*Note: This template is for informational purposes only and should not be construed as legal advice. Consult with a legal professional before executing any legal documents.*