What Is an Options Contract and What Are Its Two Primary Types? ▴ Learn

What Is an Options Contract and What Are Its Two Primary Types?

An options contract is a financial derivative that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price (strike price) on or before a specific date (expiration). The two primary types are a Call option, which grants the right to buy, and a Put option, which grants the right to sell.

The buyer pays a premium for this right.

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