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What is an option?

Options are investment tool that unable a trader to do more than simply buying and selling individual options. It is a contract that allows but doesn’t require to buy or sell an underlying instrument like a stocks, commodities or even index at a predetermined price over a certain period of time.

Buying an option that allows you to buy shares at a later time is called a "call option," whereas buying an option that allows you to sell shares at a later time is called a "put option."

Options are considered lower risk due to the fact that you can withdraw an options contract at any point. The price of the option is just its premium which is a percentage of the underlying asset or security.

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