Options are derivative contracts since their value is derived from an underlying market price, such as a security or a commodity. Purchasing an option allows the holder to take action only if he chooses to, just like an insurance policy.
Options are the building blocks that allow sophisticated financial risk management and on which many customized financial strategies are created. These strategies could be used by market participants like investors, hedgers, and speculators.
At the end of the course, you will be able to understand the following: