Options Trading

Options are essentially educated gambling. They're for professional traders and carry a lot more risk than regular investing. Essentially, you have to speculate on or hedge against the movement of stock prices without actually owning the stocks themselves. It's like placing a bet on where you think a stock’s price will go.

There are two main types of options: call options and put options. A call option gives you the right to buy a stock at a set price, known as the strike price, before the option expires. If the stock price goes up above the strike price, you can buy it at the lower strike price and potentially make a profit. On the other hand, a put option gives you the right to sell a stock at the strike price. If the stock price falls below the strike price, you can sell it at the higher strike price and potentially profit from the difference.

If the stock doesn’t move in the direction you anticipated, you could lose the premium you paid for the option or more. So, while options offer the chance for significant gains if you’re correct, they also carry a higher level of risk.