An options contract is an agreement between two parties that gives the buyer the right to buy or sell a financial asset, like stocks, commodities, or currencies, at a predetermined price on or before a certain date. It’s a form of hedging – a way for investors to limit their risk while potentially making money off of favorable ups and downs in the market. Options contracts are a great tool for managing investment portfolios, but they’re not without some drawbacks. They can be highly risky if underestimated, and they involve significant transaction costs. If you’re new to options trading, it’s best to start small and seek professional advice.