Options, Unlike Any Other.
Options Trading UAE: What is It?
Options are contracts granting buyers the choice, without obligation, to purchase or sell a set asset quantity on a predetermined future date at an agreed price today. The buyer pays a premium for engaging in an options contract.
There are two forms of options:
Call option
A call option gives the buyer the right to buy an underlying asset.
The call option holder (the long position) enters into a contract with the writer (the short position) to purchase a security if the price rises above the strike price (the predetermined price at which the option allows the underlying asset to be bought) on the expiration date of the option contract.
Put option
A put option gives the buyer the right to sell an underlying asset. Here, the buyer is betting on a lower price in the future on the expiration date. They are bearish and feel that the underlying asset price will fall on or before the expiration date. In contrast, the put seller assumes that the price will remain unchanged or rise in the future.