What is options trading?

Options trading is a type of derivative trading where traders buy or sell the right to buy or sell a specific underlying asset, such as a stock, commodity, or currency, at a specified price and time. The buyer of the option pays a premium to the seller of the option for the right to buy or sell the underlying asset, but is not obligated to do so. The seller of the option is obligated to sell or buy the underlying asset at the specified price and time if the buyer chooses to exercise the option. Options trading can be used for hedging or speculation purposes and involves a high degree of risk.