What is options trading
In: Other
Options are basically contracts that state “On date X I give you the option to buy/sell Y at the price Z”
So they are a bet into the future. You bet the value will be higher/lower than the one who offers the option to make a profit if you’re right. You pay a fee for the contract, and if your prediction is wrong you only lose the fee because as the name implies it’s optional.
The option can be resold as well, and the closer the due date comes the closer the value of it will approach the current difference between the negotiated price and the current market price (since the closer the date is, the less likely price changes become)
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