Options

An option is a contract that gives its buyer the right, but not the obligation, to buy or sell a specific asset at a set price before a set expiration date. A call option gives the right to buy at that price, a put option gives the right to sell at it.

Options are a type of derivative and can be used to hedge an existing position, to speculate on a stock's future direction with less money upfront than buying the shares outright, or to generate income by selling options against shares already owned. Because an option can expire worthless, options trading carries the risk of losing the entire amount paid for the contract.