An options contract is a derivative security, meaning it derives its value from the another security. The writers, or sellers, of an options contract make a premium on the sale, which is how they make money. The buyers of an options contract will have the option of taking some sort of action in the future if specific conditions become true – such as the price of security hitting a specific price.
Put options and call options are the most common types of options contracts. Investors can be on either side of put options and call options – either buying them, or writing (or selling) them.
Derivatives are usually a tool of more educated investors, but by becoming a FlashCourse user, you can begin the process of becoming a financial wizard yourself. Get the free FlashCourse app for iOS and Android to learn more.
Single Option Fever
Chapters In This Course Include…
- Features of Calls
- More on Calls
- Features of Puts
- Basic Definitions
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