The most common type of investing involves buying stock, holding on to it until it reaches a higher price, and then selling it for a profit. This can take a long time, months, even years. Another type of investing known as options trading offers an alternative to traditional buy-and-hold investing for those who want a quicker return on their money. Making a profit from options can take as little as a month or two.
Trading options involves buying and selling contracts for stock instead of the stock itself. The price of a contract, called the premium, represents the profit the seller of the option makes. The buyer makes a profit by trading the underlying stock.
