Divergence Secrets What Are Options?
An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a fixed price (called the strike price) on or before a certain date (called expiry). There are two types of options:
Call Option – gives the right to buy.
Put Option – gives the right to sell.
The person who buys an option pays a fee known as the premium. The seller (also called the option writer) receives this premium and has the obligation to carry out the contract if the buyer chooses to exercise it.
