What Are Options?

An option is a contract that gives the buyer the right (but not the obligation) to buy or sell an underlying asset at a set price before a certain expiration date. There are two main types: calls and puts.

Why Trade Options?

• Options are versatile instruments that can be used for hedging, speculating, and generating income through covered calls. They allow traders to gain leveraged exposure to stock price movements without the need to own the actual stock.

  Basic Strategies for Beginners

  • Covered Calls: Owning stock while selling a call option to generate income.

  • Protective Puts: Buying a put option to protect against a potential drop in the underlying stock.

  • Straddle and Strangle Strategies: These involve buying calls and puts to profit from volatility.

Understanding Options Greeks

• Terms like Delta, Gamma, Theta, and Vega are essential in understanding how an option's price will behave in relation to the stock's price, time decay, and volatility.