Part 11 Trading Master Class

What Are Options?

Options are financial contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (called the strike price) before or on a specific date. Unlike shares, which give ownership, options only provide trading rights.

There are two main types of options:

Call Option – gives the right to buy.

Put Option – gives the right to sell.

The buyer of an option pays a premium, while the seller (or writer) receives the premium and must fulfill the contract if the buyer exercises it.