Options Primer

An option is a contract created between a buyer and seller of an asset, which gives the holder of the asset in question the option, but not the obligation to purchase (or sell) the asset at a pre-determined price.

The buyer of the option has the right, but not the obligation to buy(or sell) an agreed quantity of an asset (the underlying) from(or to) the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller (or “writer”) is obligated to sell(or but) the asset should the buyer so decide. The buyer pays a fee (called a premium) for this right.

View the following to learn more about options:

Call optionsPut Options