Stock options are powerful financial instruments that provide flexibility and potential for significant profit in the stock market. They grant investors the right, but not the obligation, to buy or sell a stock at a specified price before a certain expiration date.
Stock options are widely used by traders, investors, and even companies as a part of employee compensation plans. They are ideal for those looking to diversify their portfolio or hedge against potential losses in their investments.
A call option gives the holder the right to buy a stock at a specified price (strike price) before the expiration date. This is typically used when you expect the stock price to rise.
A put option allows the holder to sell a stock at a specified price before expiration. This is often used as a hedge or when you anticipate a decline in the stock price.
While stock options can be lucrative, they also come with risks:
Follow these steps to begin your journey into stock options trading:
Trading stock options can be rewarding, but always trade responsibly and consult with a financial advisor if needed.
