Part 3 Learn Institutional Trading

What Are Options?

Options are derivative contracts, meaning their value is derived from an underlying asset. The underlying asset may be stocks, indices, commodities, currencies, ETFs, or even cryptocurrencies.

There are two main types of options:

Call Option – Gives the buyer the right, but not the obligation, to buy the underlying asset at a specific price before a specific date.

Put Option – Gives the buyer the right, but not the obligation, to sell the underlying asset at a specific price before a specific date.

The specific price is called the strike price, and the last day the contract is valid is the expiry date.