For many sophisticated investors, trading options is a routine practice that can be hugely profitable. But did you know that retail investors can also transact options contracts on the open market? It's a strategy with potential to enhance investors' portfolios and help them better navigate the market. Want to succeed at trading options? You need to understand exactly how these contracts work. Salman Khan of the Khan Academy explains call options: contracts you purchase if you think a stock will go up in the near future.
From the first video, you’ll understand:
- How call options compare to buying a stock
- How options can help minimize risk for investments
- What the profit/loss diagram looks like for call options