FinanceMaster

By: Oliver Rahman Options are another type of investment, a riskier one compared to individual investments or ETFs, but an investment, nonetheless. They can be a useful tool to hedge bets and make money or the downfall of your entire portfolio. However, TRULY understanding options is a bit difficult considering there are more factors than just stock down=bad stock up=good. There are many types of option contracts in the investment world, but for this simple article, I will only be explaining the two most popular ones: calls and puts. So, what's an option? "An option is a financial contract that gives the holder the right, but not the obligation , to buy or sell an underlying asset—typically a stock—at a predetermined price (called the strike price ), and a-" Yeah, this didn't make sense to me either when I read the definition, and what makes it harder is that I've seen the same explanation for options everywhere. Now that I understand how they work, I'm goi...