Options Basics

Options basics begin with knowing that an option is a contract giving you the right, but not the obligation, to buy or sell an asset at a fixed price before a set date. A call option gives the right to buy, while a put option gives the right to sell. Traders use options to speculate, protect investments, or manage risk. The buyer pays a premium for this right, and the seller receives that premium but takes on the obligation. Options can offer high rewards, but they also carry high risk, so beginners should learn carefully before trading them with real money.