Option

An option gives the buyer the right, but not the obligation, to buy or sell stock at a set price on or before a given date. Investors, not companies, issue options. Investors who purchase “call” options bet the stock will be worth more than the price set by the option (the strike price), plus the price they paid for the option itself. Buyers of “put” options bet the stock’s price will go down below the price set by the option. Options involve risk and may not be suitable for all investors. Prior to buying or selling an option, an investor must received a copy of “Characteristics and risk of Standardized Options”.