Options come in two flavours: calls (right to buy) and puts (right to sell). Buyers pay a premium; sellers collect it. They're used for speculation, income, and hedging.
Options add leverage and time decay — small moves can produce big percentage swings, but time works against option buyers.
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Open Decision Lab →Frequently asked questions
Are options risky?
Buying options risks the full premium paid; selling naked options can lose far more than the premium collected. Beginners should learn defined-risk strategies first.
Related terms
Call option
A contract giving the buyer the right to purchase an asset at a set strike price by expiry.
Put option
A contract giving the buyer the right to sell an asset at a set strike price by expiry.
Volatility
How much a price moves up and down over a period.
Strike price
The pre-agreed price at which an option can be exercised.