How Options Work How You Can Use Options > Options are the most
versatile trading instrument ever invented. Since options cost
less than stock, they provide a high leverage approach to
trading that can significantly limit the overall risk of a trade
or provide additional income. Simply put, option buyers have
rights and option sellers have obligations. Option buyers have
the right, but not the obligation, to buy (call) or sell (put)
the underlying stock at a specified price until the 3rd Friday
of their expiration month. There are two kinds of options: calls
and puts. Call options give you the right to buy the underlying
asset. Put options give you the right to sell the underlying
asset. It is essential to become familiar with the inner
workings of both. Every strategy you learn from this point on
depends on your thorough understanding of these two kinds of
options. There are no margin requirements if you want to
purchase an option because your risk is limited to the price of
the option. In contrast, option s