Getting Started With Options

When it comes to investing, it's nice to keep your options open.

Options allow you to make a bet on the direction of an underlying investment such as a stock, bond or market index without actually buying that investment. In addition to investing in options, Wall Street follows options trading to glean investor sentiment about the market as well as individual stocks. The days that certain options expire can have a volatile impact on the broader market.

There are countless ways investors use options -- from using them as a hedge to avoid a big loss in a stock to making very risky bets that a stock will rise or fall -- but they revolve around two simple choices: options to buy and options to sell. ...