option

An option is a contract giving the buyer the right but not the obligation to buy (in the case of a call option) or sell (in the case of a put option) the underlying asset at a specified price on or before a specified date. Options are traded on exchanges, and their prices are determined by supply and demand.

Buying an option can be a way to speculate on the future price of an asset or to hedge against risk. For example, an investor who believes that the price of a stock is going to rise may buy a call option on that stock. If the stock price does rise, the investor can exercise the option and buy the stock at the specified price, even if the market price has gone up.

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A put option is a financial contract that gives the buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a specified price on or before a specified date. Put options are often used to hedge against the risk of a decline in the price of the underlying asset.

Put options can be bought and sold on an options exchange. When you buy a put option, you are essentially buying the right to sell the underlying asset at a specified price. The price at which you can sell the asset is called the strike price. The date on which you can sell the asset is called the expiration date.

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