Definition
Options Definition
Options are contracts based on an underlying stock. Each options contract gives investors the opportunity to buy or sell the underlying stock at a predetermined price (strike price) during a predetermined period of time (expiration date). When an investor purchases an option, they are paying a premium to the seller of the option. This premium is based on the likelihood that the option will expire in the money, meaning that the investor will make a profit, and the higher the likelihood, the higher the premium will be.
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