InvestorQ : what is options trading
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Unnikrishna Pillai made post

what is options trading

Answer
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Purvesh answered.
2 years ago


An option is a right to buy or sell an equity share or any other asset but without an obligation. That means you can buy the asset at a future date if the price is suitable can sell the asset at a predetermined price at a future date if it suits you.
If the price is not suitable then you can just opt to forego the option and say that you don’t want to exercise the right to buy or sell the option. When you trade options in the stock market, you actually trade these rights without the obligation.
Options need to be understood as distinct from futures because futures are a right and an obligation. Options, on the other hand, are a right without an obligation. When you buy an option in the market you get a right to buy or sell an asset without the obligation to do so.
A right to buy is referred to as a call option while a right to sell is referred to as a put option.