Option (finance)

Options are like special kinds of contracts that give you the right to buy something, like a stock, at a certain price in the future. It's kind of like when you go to the store and you agree to pay a certain amount for something that you're going to buy in the future. With an option, the price you agreed to pay for the stock is called the strike price. When you buy an option, you have the right, but not the obligation, to buy the stock at the strike price anytime before a certain date. If the stock price goes up, then you will make money because you can buy the stock at the lower strike price and sell it at the higher price. But if the stock price goes down, then you won't make any money, because you can't buy it at the higher strike price.