What are stock options and how do they work?

Options give you the right (not obligation) to buy (call) or sell (put) a stock at a specific price (strike) by a specific date (expiration). Calls profit when stocks rise; puts profit when stocks fall. Options amplify both gains and losses — you can lose 100% of your investment. Start with covered calls and cash-secured puts to learn. Never sell naked options as a beginner.