What an Option Is
An option is a paid right to buy or sell at a set price before a deadline.
The idea
An option is a contract that gives you the right, but not the duty, to buy or sell something at a set price before a deadline. You pay money up front for it, called the premium, whether or not you ever use it. If the price never moves your way, the option can expire worthless and the premium is simply gone. Because the whole value can vanish on a deadline, options are usually treated as an advanced tool rather than a starting point. 🎟️
Words to know
- Option
- A contract giving you the right to buy or sell at a set price before a deadline.
- Premium
- The money you pay up front to get the option.
- Strike price
- The set price written into the option.
- Expire
- When the deadline passes and the option stops working.
- Call option
- An option that lets you buy at the strike price.
Try it — no account needed
True or false about options?
An option is the right to buy or sell at a set price before a deadline.
In the full lesson
- 1True or false
- 2Work out the number
- 3Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
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