A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date. There are two types of options: puts, which is a bet that a stock will fall, or calls, which is a bet that a stock will rise. There are two different styles of options: American and European. American options can be exercised at any time between the purchase and expiration date. European options, which are less common, can only be exercised on the expiration date.Options do not only allow a trader to bet on a stock rising or falling but also enable the trader to choose a specific date when they expect the stock to rise or fall by. This is known as the expiration date. The expiration date is important because it helps traders to price the value of the put and the call, which is known as the time value, and is used in various option pricing models such as the Black Scholes Model.Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

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