What Is Options Trading? A BeginnerFriendly Guide - Maharashtra - Pune ID1622476

Options trading is the activity of purchase and sale of financial contracts called options. An option is called a derivative contract, which gives the buyer of the option the right, but does not require the buyer to buy or sell an underlying asset, typically a stock, at some predetermined price before a certain date.

Options enable you to speculate on stock prices but not owning stock. With traditional stock trade, you buy it and have to own the stock. That is why it is a common instrument used by traders who seek flexibility, leverage and an opportunity to manage risks.