Options#
An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price and at a specific time. There are two types of options: call options and put options.
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A call option gives the buyer the right to buy an underlying asset at a specific price (strike price) on or before a specific date (expiration date).
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A put option gives the buyer the right to sell an underlying asset at a specific price (strike price) on or before a specific date (expiration date).
Options are used as a way to hedge against risk, or as a way to speculate on the price movement of an underlying asset.
Options can be used in a variety of ways, but the basic idea is that you pay a premium for the right to buy or sell an asset at a specific price. If the price moves in your favor, you can exercise your option and buy or sell the asset at a profit. If the price doesn't move in your favor, you can let the option expire and you will only lose the premium you paid for the option.