An option is a contract with the rights, not the obligation to buy or sell a security at a certain pre-determined price within a certain time period. Examples, calls and puts, lease options on a house, etc.
Calls give the owner the right to buy a stock at a certain price for a certain period of time.
Puts give the owner the right to sell a stock at a certain price for a certain period of time – Insurance.
Options cost money.
Option expire worthless if the stock price isn’t past strike price at expiration.
Trade options 30-60 days to expiration.
Time Decay – All options lose value as time goes on.
ITM – call above strike price, put stock below strike price
OTM call stock below the strike price, put stock above the strike price
Option value goes up for call as a price increase, and up for put when the price decreases.