Options Trading Business

Options trading is a type of financial trading that allows investors to buy or sell the right to purchase or sell an underlying asset at a fixed price, at a future date. Options trading operates on the basis that the buyer has the option to exercise the contract but is not under any obligation to do so.

Options are a type of contract that gives the buyer the right to buy or sell a security at a specified price at some point in the future. An option holder is essentially paying a premium for the right to buy or sell the security within a certain time frame.

If market prices become unfavorable for option holders, they will let the option expire worthless and not exercise this right, ensuring that potential losses are not higher than the premium. If the market moves in a favorable direction, the holder may exercise the contract.

Options are generally divided into "call" and "put" contracts. With a call option, the buyer of the contract purchases the right to buy the underlying asset in the future at a preset price, known as the exercise price or strike price. With a put option, the buyer acquires the right to sell the underlying asset in the future at the predetermined price.