Options are contracts that represent the right, but not the obligation, to buy or sell a security at a specified price within a specified time. The ability to speculate with options makes them risky, but they can also be used to reduce risk when used to hold a security. If you’re a sophisticated investor with an in-depth understanding of the risks and rewards associated with options trading, they can be a versatile security. The settlement period for an option trade is one business day.
Get to know the two types of options:
A call gives the holder the right to buy the security.
This type gives the holder the right to sell the security.