Options
What is Options?
Contracts that give the right, but not the obligation, to buy or sell an asset at a set price before a set date.
Understanding Options
The buyer pays a premium for the right; the seller (writer) receives the premium and takes on the obligation. In the U.S., a standard stock option contract covers 100 shares.
Options are used to hedge risk, earn income, or speculate. Buyers can lose the whole premium if the option expires worthless; some selling strategies carry large or unlimited risk.