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An option is a contract that allows (but doesn't require) an investor to buy or sell an underlying instrument like a security, ETF or even index at a predetermined price over a certain period of time. Buying and selling options are done on the options market, which trades contracts based on securities. Buying an option that allows you to buy shares at a later time is called a "call option," whereas buying an option that allows you to sell shares at a later time is called a "put option." 

However, options are not the same thing as stocks because they do not represent ownership in a company. And, although futures use contracts just like options do, options are considered a lower risk due to the fact that you can withdraw (or walk away from) an options contract at any point. The price of the option (it's premium) is thus a percentage of the underlying asset or security

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