When people type “what are stock options trading” into a search bar, they’re looking for a clear, beginner-friendly explanation.

When people type “what are stock options trading” into a search bar, they’re looking for a clear, beginner-friendly explanation. Stock options trading involves buying and selling options contracts—financial agreements that give you the right, but not the obligation, to buy or sell a stock at a set price (the strike) before a set date (the expiration). Calls give you the right to buy; puts give you the right to sell. Traders use options to hedge risk, generate income, or speculate with defined capital using premiums instead of purchasing shares outright. Compared with owning stock, options can offer leverage and flexibility, but they also introduce time decay, volatility sensitivity, and the possibility of losing the entire premium. Successful options traders learn how pricing works, choose strategies that fit their goals, and manage risk with position sizing and exit plans. This page breaks down core concepts, common strategies, and FAQs so you can decide whether options are a smart addition to your investing toolkit.

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