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Financial derivatives that give the holder the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a specified price before a specified date.
Options are versatile instruments used for speculation, hedging, and income generation. Each options contract represents 100 shares of the underlying stock. The price of an option (premium) is influenced by the stock price relative to the strike price, time until expiration (time decay), implied volatility, and interest rates (collectively described by the "Greeks": delta, gamma, theta, vega). Options can expire worthless, meaning buyers can lose their entire investment. Approximately 60-80% of options expire worthless or are closed before expiration, which is why many sophisticated investors prefer selling (writing) options rather than buying them.