Options trading involves speculating on the future price movements of stocks, and it can be a lucrative way to generate income. However, it’s important to understand how options work before you start trading them. One of the most important things to understand is how to buy options on stocks.
When you buy an option, you are essentially buying the right, but not the obligation, to buy or sell a certain number of shares of a stock at a specific price on or before a certain date. There are two types of options: calls and puts. A call option gives you the right to buy a stock at a certain price, while a put option gives you the right to sell a stock at a certain price.