An options contract is a derivative security, meaning its value is derived from the behavior of an underlying commodity, asset or security. The owner of a contract, who bought it from the writer of the contract, will have the option (but not the obligation) to exercise certain rights if specific things happen in the future.
Investors use options contracts for different reasons. Some use them to make more money for their portfolio, while others use them to reduce their risk that the market won’t behave as they expected it to. In any case, any derivative investment is usually best left to more educated investors.
The Options Contract Game
Chapters In This Course Include…
- Options Basics
- The Two Parties
- Three Specs
- Puts and Calls
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