Options trading is the purchase or sale of a contract of an underlying security. Investors can trade options to potentially benefit in any market condition.
An option is a contract between two parties that gives the holder the right, without the obligation, to buy or sell a security during a designated time period at a specified price. The option writer must keep the agreement if the holder chooses to exercise their right.
There are many strategies investors can use in options trading. Each strategy has benefits and risks. Although beginner strategies exist, options are typically used by active traders with investing experience.