Intro to Investing Series - Understanding Call and Put Options

In this video, Sid Rajeev will explain the call and put options. Options are a type of derivative security.

An option is a derivative because its price is intrinsically linked to the price of something else.

If you buy an options contract, it grants you the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. A call option gives the holder the right to buy a stock, and a put option gives the holder the right to sell a stock. Think of a call option as a down-payment for a future purchase.