Jonathan Hoenig Stock options are an incredibly versatile investment flavor. Despite their reputation as an instrument for high-rollers, there are several conservative options strategies almost anyone can employ.
Sophisticated investors find options can be highly profitable.
They're also a lot of fun. Options are derivatives, meaning that their value is derived solely from some other financial instrument. So, the value of an IBM stock option, for example, will be largely based on IBM's current stock price. For now, let's stick with stocks. A stock option is the right to either buy or sell 100 shares of a stock at a predetermined price within a specific parameter of time in the future.