What’s the difference between stocks and options?
In: Other
Option contacts written on stocks involve selling/purchasing the right (but not necessarily an obligation) to purchase or sell stock at a predefined point at any time up until the expiration date for the contract.
These contracts can be traded and the value will shift based upon factors such as the current stock price, anticipated movements felt by investors, and the time remaining before expiration.
A stock is a percentage ownership in a company. An option is a contract between a buyer and a seller for stock.
Example:
you own your house = stock
You own a contract to buy or sell your house = option
Stocks are the actual thing you buy and sell. Options are contracts that two people agree to, agreeing for one person to have the right to buy or sell their stock to/from a second person for an agreed upon price at any point before a certain expiration date.
Latest Answers