I get quite a bit of interest from readers regarding stock options, so here’s a simple guide on stock options, and my experience thus far with them.
Stock options are derivatives, meaning their value is derived from something else. You can have options on… well, stocks, on commodities, on indices, on almost anything under the sun as long as there’s a tradable market in it.
An option is exactly that. You either get (if you own the option) the option to buy or sell something at a certain price, within a certain time frame. If you sold the option, you are giving the counterparty the option to do exactly that.
Broadly speaking, there are 2 types of options you can enter into: CALL options and PUT options.
Call options are a bet that the underlying derivative value will go up, while put options are a bet that the underlying value ......