Options are contracts with specific terms and conditions:
Strike Price: The price at which the option holder can buy (call) or sell (put) the underlying asset. Expiration Date: The date on which the option expires and becomes worthless if not exercised. Premium: The price paid for purchasing the option.
For example, if you buy a call option with a strike price of $50 and the underlying stock price rises to $60, you can exercise your option to buy the stock at $50, thus making a profit. If the stock price falls below $50, you can choose not to exercise the option and only lose the premium paid.