Trade Learn Earn Academy Team
August 29, 2026An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a set price before a specific date. Traders use options to speculate on price moves or to hedge an existing position, often with less capital tied up than buying the asset outright.
A call option gives the right to buy at the agreed (strike) price, typically used when a trader expects the price to rise. A put option gives the right to sell, typically used when a trader expects the price to fall.
Options can limit downside to the premium paid, generate income by selling contracts against an existing position, or hedge a portfolio against a sudden move — but they can also expire worthless, so understanding the mechanics before trading them matters.
