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An option contract gives you the right, but not the obligation, to buy or sell an asset at a set price before a future date. There are two types: call options allow buying at a certain price, while put options allow selling at a certain price. This flexibility contrasts with futures contracts where you are locked into a set price. Options give the owner the ability to protect against price declines or increases, while still having the opportunity to benefit from price movements. However, this right comes at a cost called a premium.
