You can trade in different ways. One way is to buy and sell options. But if you want to use it, you have to figure out what it is and how it works. This will help you make choices that will affect you for the rest of your trading career. Here are some basic things you should know about trading options to help you.
What's a choice?
This is a simple answer to your question about what an option is. It is a legal document that lets two people agree that the buyer has the right to buy or sell a certain number of shares. It is set at a price and date that have already been set. But the buyer is not required to take the option. He has the right to do it, but he doesn't have to. To make sure this works out, the buyer will pay extra to the seller.
Options to Call
You need to know about two different ways to trade options. In a call option, the person who buys it has the right to buy the stock that it is based on. It is set at a price and a date that have already been set. Again, the buyer can do this, but he or she doesn't have to.
Option to Put
In option trading, the put option is the second type of option. In this type of option, the person who buys it has the same basic information but is selling the underlying shares. He is in the same position, where he has the right to do it but is not required to do it. Also, the same rules about the price and date that were already set apply. The person who buys a put option doesn't have to give the underlying shares until they use the option.
If you want to learn more about trading options, all you have to do is talk to your financial advisor and ask how it can help you.
