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What do you mean by futures and options in stock market?

What do you mean by futures and options in stock market?

Options: these are contracts to buy or sell stock at a set price there are basically 2 types with 2 sides each;
Calls which is the option to buy 100 shares at the price you specify within the next 9 months(long).
Puts which is the option to sell 100 shares of stock at the price you specify within the next 9 months(long).
if you are buying these (long) then you get that option but you must pay the person selling this option a premimum for taking the risk that you would excercise the option (actually go through with the closing transaction)

On the other side of those there is the short position (you sold the option)
Calls (short) obligation to sell 100 shares of a stock at the price specified in the option
Puts (short) obligation to buy 100 shares of a stock at the price specified in the option
If you are short the option you got paid to take a risk. assuming that the stock price doesnt do what the other side is hoping for you walk away at the end with the premimum. (you don't have to give it back)

Now this is not the only part of options and inside these 4 little things is a whole world of risk...you have to completely understand what you are getting into with this as options have the ability to make a ton of money fairly quickly but they also can have an unlimited risk associated with them (if you are on the wrong side of an option (short a call) and the stock sky rockets you could be forced to buy the stock really high in order to sell it really low to the person who bough the call from you.

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