<p>Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price (strike price) on or before a certain date (expiration date).</p>

<h2>How It Works</h2>
<ul>
  <li><strong>Call Option:</strong> Gives the buyer the right to <strong>buy</strong> the underlying asset at the strike price.</li>
  <li><strong>Put Option:</strong> Gives the buyer the right to <strong>sell</strong> the underlying asset at the strike price.</li>
  <li>The seller (writer) of the option receives a <strong>premium</strong> for taking on the obligation.</li>
  <li>Options can be exercised <strong>anytime</strong> up to the expiration date, or <strong>let expire worthless</strong> if not profitable.</li>
</ul>

<h2>Why It Matters</h2>
<p>Options are versatile tools for investors and traders. They can be used for:</p>
<ul>
  <li><strong>Hedging:</strong> Protecting a portfolio from market downturns by buying put options.</li>
  <li><strong>Speculation:</strong> Betting on the direction of an asset's price with limited risk.</li>
  <li><strong>Income Generation:</strong> Selling covered calls or cash-secured puts to collect premiums.</li>
</ul>
<p>For instance, an investor who believes a stock will rise can buy a call option, paying only a fraction of the stock's price (the premium), and potentially profit from the stock's increase in value.</p>