Editing 1course Stock Market (section)

== How Options Trading Works ==

=== Step 1: Choose Your Strategy ===
Decide whether you want to buy a call option (if you expect the stock to rise) or a put option (if you expect the stock to fall).

=== Example: If you believe Amazon’s stock will increase due to strong earnings, you might buy a call option. ===

=== Step 2: Select the Strike Price and Expiration Date ===
Choose a strike price and an expiration date that align with your expectations for the underlying asset’s price movement.

=== Example: You select a call option with a strike price of $3,000 and an expiration date three months from now. ===

=== Step 3: Purchase the Option ===
Buy the option through your brokerage account. The premium will be deducted from your account balance.

=== Example: You pay a $50 premium for the call option. ===

=== Step 4: Monitor the Market ===
Keep an eye on the underlying asset’s price and market conditions. Decide when to exercise the option or sell it before the expiration date.

=== Example: If Amazon’s stock rises to $3,200 before the expiration date, you can exercise the option to buy at $3,000 and sell at the market price for a profit. ===

=== Step 5: Exercise or Sell the Option ===
If the market moves in your favor, you can either exercise the option to buy/sell the underlying asset or sell the option itself for a profit.

=== Example: Sell the call option for a higher premium if the stock price rises significantly, or exercise the option to buy the stock at the lower strike price. ===