Trading options


Really Dumb



Trading options
Trading options is when you buy or sell the right to buy or sell a stock at a set price in the future. It’s like a bet on the stock price. For example, let’s say you think the stock price of McDonalds will go up in the next month. You could buy an option to buy the McDonalds stock at a set price in the next month. If the stock price goes up, you can buy the McDonalds stock at the set price and then sell it for more money. An analogy that might help you understand trading options is like buying a ticket to a concert. You buy a ticket to the concert, but you don’t have to go. You can sell the ticket before the concert if you think the price will go up before the show. Here’s a fun fact: Trading options is a popular way to make money on the stock market, with over 1 billion options traded every day.