Option

An option is a contract that gives its holder a right related to an underlying asset at a stated price by a stated date, while the seller assumes the corresponding obligation if exercised.

A simple example

A covered call writer receives a premium but may have to sell owned shares at the strike price if the option is exercised.

Why this matters to income investors

Options can change income, upside, downside, timing, and tax outcomes, and some strategies can create losses larger than the premium received.

How to use option in your research

Identify whether the contract is a call or put, bought or sold, covered or uncovered, and review strike, expiration, premium, and assignment risk.

This material is general education and information, not individualized investment, tax, or legal advice.