VineLesson 102 · Written for kid, teen, and little
What an Option Is
An option is a paid right to buy or sell at a set price before a deadline.
An option is a contract that gives you the right, but not the duty, to buy or sell something at a set price before a deadline. You pay money up front for it, called the premium, whether or not you ever use it. If the price never moves your way, the option can expire worthless and the premium is simply gone. Because the whole value can vanish on a deadline, options are usually treated as an advanced tool rather than a starting point. 🎟️
Words to know
5Option
A contract giving you the right to buy or sell at a set price before a deadline. You are buying a choice, not the share itself.
Premium
The price paid to buy an option. It is a cost, not a refundable deposit. Selling the option later may recover more or less than you paid; an expired worthless option leaves you with the premium loss.
Strike price
The set price written into the option. A $55 strike lets you buy at $55 even if the share reaches $70.
Expire
The deadline when an option stops existing. A $55 call left unexercised has no exercise value at expiry if the share price is $55 or below, even if it traded higher earlier.
Call option
An option that lets you buy at the strike price. You want one when you think the price is heading up.
True or false about options?
An option is the right to buy or sell at a set price before a deadline.
Swipe the card — or tap.
In the full lesson
- 1True or false
- 2Work out the number
- 3Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
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