1. What is option trading
An option is a financial product (contract) that is derived from the underlying asset. It gives the buyer a right, but not an obligation, to buy or sell certain underlying assets at an agreed price and date.
The option holder can either sell the contract or exercise the right within a prescribed timeframe, or either exercise it on the expiration date or waive the exercise right. The option seller will be assigned an obligation if the buyer exercises their right and will fulfil the obligation to sell (call) or buy (put) shares as stipulated on the option contract.
Trading options is risky and only experienced investors should trade options. We highly recommend reading our risk disclosure prior to starting your investment in options.