Options Trading

An option is a contract that gives the buyer the right, but not the obligation, to buy (a call) or sell (a put) an underlying asset at a set strike price before a specific expiration date, in exchange for an upfront premium paid to the seller. Options can be used to hedge an existing position against a decline, generate income by selling contracts against shares already owned (covered calls), or speculate on a price move with less capital than buying the underlying asset outright — each use case carries a very different risk profile. Because an option's value depends on the underlying price, time remaining until expiration, and implied volatility, its price can move sharply even when the underlying barely does, which is why options are generally considered a more advanced tool than buying stocks or funds directly.