VIDEO: What are Options?

An option is a contract that gives an owner the right to buy or sell an asset at a strike price before a chosen date. It is a contractual right that allows an investor to profit from the change in value of another asset. There are two common types of options: Call Options. A Call Option is often used in a stock or security. When purchasing a call option, investors are open to the upside of underlying security and capping their downside to the premium paid to execute their rights. Put Options. A Put Option is slightly more complicated to understand, which is why we will create another video explaining to them. Put Options open investors up to the downside potential of underlying security. Options are often bought as a form of financial transaction, as they work as an asset. They can be traded between private parties or through live, orderly markets.