Part 8 Trading Master Class With Experts

Understanding Options: A Quick Foundation

An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a fixed price (strike price) on or before expiration.

Call Option → Right to buy

Put Option → Right to sell

Option buyers pay a premium and have limited risk but unlimited or significant upside.
Option sellers (writers) receive the premium but hold potentially large risk.

Strategies combine long/short calls and puts to shape unique payoff structures.