Options are extremely versatile securities. Option trading takes place between the buyer and seller of the option contract. That perception, however, is broadly overblown. Please consult your tax or legal advisor for questions concerning your personal tax or financial situation. Search Keywords or Symbol.




An option is a contract that gives the owner the right, but not the obligation, to buy or sell a security at a particular price on or before a certain date. You would buy a call option if you anticipated the price of the underlying security was going to rise before the option reached expiration. You could buy shares of the stock or you could buy a call option.

You could also simply trade the option for a profit without actually buying the shares of stock. You would buy a put option if you felt the price of a stock was going down before the option reached expiration. See Short Selling - Not for the Faint Hearted. Updated August 04, Investors buy and sell options just like stocks.

There are two basic types of options: The call option The put option The Call Option The call option is the right to buy options theory and trading quick underlying security at a certain price on or before a certain date. Options are not for the beginning investor, but do offer advanced traders another tool for their investment arsenal.

Note: All option quotes in this article are for illustration only. Pricing of options is a complicated process involving many factors. Get Daily Money Tips to Your Inbox. There was an error. Please enter a valid email address.




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Video embedded  · BREAKING DOWN ' Option ' Options are extremely versatile securities. Read: Forget The Stop, You've Got Options and Getting Acquainted With Options Trading. Options trading is the act of buying and Quick Answer. Options trading is the act of buying and Easiest Way to Learn Stock Options ; Theory of Options Trading ;. Trading performance may be improved using Dow Theory to examine key performance indicators Investment Products quick links. IRAs; Stocks; ETFs; Options Trading ;.