Stocks are a piece of the company that someone purchases in hopes that it will either pay dividends or increase in value so they can make a profit when they sell.
Options are contracts that allow someone to purchase stocks in the future at today's price. Exercising options is a sure thing. If you have 1,000 options to buy at $10 a share and the price of the stock goes up to $20 a share then you buy and sell in the same day and walk away with $10,000. Options are often a perk given to executives. They make that person more invested in the company doing well.
Stocks are a part of a company, or part of the equity, or value.
Options are just what they say, options. If you buy an option you have the option, or not, of buying the equity.
Late's say I have a house. You want to buy it and I agree to sell the house for ￡500k. The house will change hands on the payment of the fully price.
Now you could say you will give me ￡5000 for the option, or choice, to buy my house for ￡500k any time during the next 3 months. If the value of my house goes up in that period you may decide to EXERCISE your option and buy my house for ￡500k. It has then cost you ￡500k +￡5k.
However if it looks like my house value has gone down during the 3 months you let your option LAPSE.
All you lose is your option premium (like non-returnable deposit).
Of course options do not just have to be exercised or lapsed. They can also be TRADED or sold on to other people.
Google ' what are stocks "and youll have your answer
Google ' options " and your find your answer
Stock invest isnt for you. It you cant research something simple as this
I'm trying to learn the stock market & trading in general.
