Options are financial contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset (such as a stock, commodity or currency) at a predetermined price and date. Options trading can be used for a variety of purposes, such as hedging against potential losses or speculating on the price movements of an asset.
There are two main types of options: call options and put options. A call option gives the holder the right to buy the underlying asset, while a put option gives the holder the right to sell the underlying asset. The price of an option is determined by several factors, including the price of the underlying asset, the time until the option expires, and the volatility of the underlying asset.
Options trading can be complex and involves significant risk, as the value of an option is subject to changes in the price of the underlying asset and other market conditions. As such, options trading is typically only recommended for experienced investors who have a good understanding of the markets and the risks involved. It is important to seek professional advice before entering into options trading.