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A financial contract known as an option gives a trader or investor the right to purchase or sell a benchmark, stock, ETF, commodity, or currency at a predetermined price for a predetermined amount of time. Contracts for options have a set expiration date, which is often the final Thursday of the month. The contract expires and loses all of its value on the designated date of expiry. Options do not require the buyer or seller to uphold their end of the bargain, in contrast to futures.

When you trade options on the stock market, the shares are not yours until you execute the option. Options trading differs from stock trading because of this characteristic. Purchasing stock entitles you to a portion of the business. But when you deal in options.