options trading

Options are contracts giving the owner the right to buy or sell an underlying asset at a fixed price on or before a specified future date. Options are called derivatives because they derive their value from their underlying assets. Some traders use options to time entry and exit points to take advantage of short-term price changes. An option to buy is out-of-the-money if the specified buy price is below the actual stock price (or if the option's specified sell price is above the actual stock price).