/2 Options are contracts that give the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price(called the strike price) at or before the contract expires.
This might sound a little tricky, but I'll try to make it easy to understand.
/3 Before speaking about call and put options, you have to know that there are 2 types of options:
- European Options - may exercise only at expiration
- American Options - can be exercised at any time before the expiration date