A right to buy or sell specific securities or properties at a specified price within a specified time.
What is an Option?
An option is a financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset, such as a stock, commodity, or currency, at a specified price (strike price) within a specified period of time. Options are commonly used as a form of financial risk management, as they allow the holder to hedge against potential losses in the underlying asset. There are two main types of options: call options and put options. A call option gives the holder the right to buy the underlying asset at the strike price, while a put option gives the holder the right to sell the underlying asset at the strike price. Options can be traded on exchanges or over-the-counter and can be used in a variety of investment strategies, such as hedging, speculative trading, and income generation. However, options can also be complex and risky, and it is important for investors to understand the mechanics and potential risks associated with options before trading.
