The majority of casual investors buy and sell stocks. If they are bearish on a stock, some will even small-sell stock. But relatively few investors fully know and take advantage of trading options.

With stocks, you own a small piece of a company. But, with options, you buy the right to buy or sell underlying stock. There are two basic types of options – calls and puts. When you buy a call option, you buy the right to buy a stock at a specific price before a specific date. When purchasing place options, you buy the right to sell a stock at a specific price before a specific date. Like stocks, you can both buy and sell options.

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