Options are contracts that give the holder the right, but not the obligation, to buy or sell a financial asset at a specific price, at a future date.
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The option holder pays a premium for the right to buy or sell. The premium is the price of the option paid by the holder to the writer.
There are two types of options: calls and puts. A call option gives the holder the right to buy an asset at a specific price, while a put option gives the holder the right to sell at a specific price.
The price of the option is determined by various factors including the price of the underlying asset, the time remaining until the option expires, and the volatility of the underlying.
Options trading can be used as a powerful tool for managing risk and generating income. Options sellers can generate income through option writing strategies.
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This is not investment advice. Lucidate is not an investment advisor. Options prices can rise and fall. Always consult with a regulated financial adviser before making investment decisions.