Definition
Contracts that give the buyer the right, but not the obligation, to buy (a call) or sell (a put) something at a set price on or before a set date.
The story
Buy a call with a $50 strike price and you have the right to buy 100 shares at $50 until the option expires. If the stock climbs to $60, that right is valuable; if it stays below $50, you can let the option expire, and you lose what you paid for it. A put works the other way and gains value as the price falls. Each standard US stock option contract covers 100 shares.
Why markets watch it
Options trading is heavy enough that some analysts argue it can affect how the underlying stocks and indexes move, especially near expiration.
Connects to
Strike priceOption premiumOptions expirationImplied volatility0DTE
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms