Option

Options are financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific time frame. There are two main types of options: call options, which give the right to buy, and put options, which give the right to sell. Traders use options for various purposes, including speculation, hedging, and income generation.

One of the key benefits of options is leverage, they allow traders to control a larger position with a relatively small upfront cost, known as the premium. They can, however, carry risk and since they have expiration dates, their value can decline over time, a concept known as time decay.

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