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what is an option contract when you buy an option you obtain the right but not the obligation to buy or sell an asset such as a futures contract or commodity at an agreed price at or before a future date there are two types of options call options give the owner the right to buy something at a certain price and put options give the owner the right to sell something at a certain price options contracts give the owner the choice to trade at a price level rather than being locked into a price as with futures contracts for example the owner of a put option has the ability to protect against a decline in prices below a certain price level while still having the opportunity to benefit if the prices rise above it whereas the owner of a call option has the ability to protect against a rise in prices above a certain price level while still having the opportunity to benefit if the prices fall below it however this right does not come for free and requires what is called a premium which is paid u
