Types of Investments
There are several ways to invest your money. To determine which investment vehicle is right for you, you need to understand the characteristics of each type.
An option is a contract that represents the right, but not the obligation, to buy or sell a security at a specified price within a specified time. If you’re a sophisticated investor with an in-depth understanding of the risks and rewards associated with options trading, options are a versatile security. Options can be used to speculate, which can be risky, or they can be used to reduce the risk of holding a security. The settlement period for an option trade is one business day.
There are two types of options:
- Call Option
A call gives the holder the right to buy the security.
- Put Option
This type gives the holder the right to sell the security.