What Are Options

[DanDare]

Options are securities which give the investor the right, with no obligation to purchase(call) or sell(put) a specific commodity at some point in the future.

Options are either exchange traded, where they are standardised in terms of contract sizes and expiry cycles, or OTC traded, where the investor can specify or negotiate the terms of the contract.

[RhodyTrader]

Originally Posted by DanDare

Options are securities which give the investor the right, with no obligation to purchase(call) or sell(put) a specific commodity at some point in the future.

To say that an option relates to a "specific commodity" is limiting. Options are traded on stocks, stock indices, forex, fixed income, and all kinds of futures contracts.

[itsbearabull]

Options can be very risky but they aren’t inherently bad. They also provide a hedge to protect investors from losses in particular stocks. However, Warren Buffett has been warning investors about for years: the unregulated and growing use of derivatives.

<Link remove, please read the rules>

[Dodjit]

An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date.