Option buying

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Option buying


Option buying is a type of trading in the stock market where a trader purchases the right, but not the obligation, to buy or sell a stock at a specific price within a specific time period. There are two types of options: Call Options (right to buy) and Put Options (right to sell). The buyer pays a small amount called a premium to get this right. If the market moves in their favor, they can earn a good profit. If it doesn’t, the maximum loss is limited to the premium paid. Option buying is popular among traders because it offers low risk and high reward potential, but it also comes with challenges like time decay and market unpredictability. It’s important to understand market trends and timing before entering option trades.


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