Stock Options

A stock option is a derivative security that provides an investor with the opportunity to buy (through a call option) or sell (through a put option) a particular stock at a predetermined price, known as the strike price, within a specified period, known as the expiration date. This financial instrument offers the potential for profit by allowing the option holder to benefit from favorable movements in the underlying stock's market price, without actually owning the stock itself. Stock options are actively traded on various exchanges, and their prices, represented by the option premiums, are influenced by factors such as the current stock price, time remaining until expiration, implied volatility, and prevailing interest rates. While options can be used for hedging risks or as speculative tools, investors should be aware of the inherent complexities and risks involved in options trading and conduct thorough analysis before engaging in such transactions.