Option Contract

An option contract is a financial agreement that gives a buyer the right, but not the obligation, to purchase or sell an asset at a predetermined price within a specific timeframe. There are two main types: call options (buying) and put options (selling). For a fee called a premium, the buyer can benefit from price changes without having to own the asset outright. If the market moves favorably, the buyer can exercise the option; if not, they can let it expire and only lose the premium paid. This provides flexibility and potential for profit with limited risk.