I understand that buying an option gives you the right to sell a certain stock at the strike price, but what is the point of this? How can you profit from guessing right, and is there any advantages to options that stocks don’t have?
In: Economics
An option is simply the “option” to buy at a certain price regardless of the current trading price. If the current trading price is higher than your strike price then you make money. If it’s lower then you are known as being shit out of luck.
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