How does option in stock world work?



I own stocks and mutual funds and buy stocks at market, limit, and recently learned T-Stop% and T-Stop$ . But have no idea what Option is and how it works. Can someone explain in 1, 2, 3…simple step term?

One Reply to “How does option in stock world work?”

  1. Options pricing is extremely complicated and is based on a mathematical equation called “Black-Scholes.” But for simplicity, an option is kind of like a movie ticket. When you buy a movie ticket, you have the OPTION to go to the movie, but you don’t HAVE to go. Same thing with an option – you can buy the stock if you want to, but you don’t have to if its not profitability.

    I have a bunch of free educational videos dedicated to this topic at http://www.kanjoh.com





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