Options are contracts giving the holder the right (not obligation) to buy (call) or sell (put) an underlying asset at a specified strike price by an expiration date. Each contract typically represents 100 shares. Options can be used for hedging (insurance against losses), income generation (covered calls), or speculation (leveraged directional bets). Options are inherently complex and risky — most retail option traders lose money. Common strategies: covered calls (sell calls against owned stock for income), cash-secured puts (sell puts to potentially buy stock cheaper), protective puts (buy puts as insurance). Avoid naked options selling without deep knowledge.
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Options
August 22, 2026 · Aditya Gupta
Investing
Related terms
401(k)
A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
Asset Allocation
Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
The Backdoor Roth is a strategy for high earners (above the Roth IRA income limit) to contribute to…
Beta
Beta measures a stock's volatility relative to the overall market (S&P 500 = beta of 1). Stocks with…
