What are Options Contracts?

Binance Academy · 2023-06-01T09:29:49.000Z

What are Options Contracts? An options contract is a contract that gives a trader the right to buy or sell an asset at a predetermined price on or before a set date. Although it may seem similar to futures contracts, traders who purchase options contracts are not obligated to honor their positions. Options contracts are derivatives that can be based on a wide range of assets, including stocks and cryptocurrencies. These contracts may also be related to financial ratios. Many traders and investors use these types of contracts to reduce risk.