Mirror Mirror on the Wall, Explain for Me a Put and Call

Options are like wiccans; they frighten those who don't understand them when there is really little to fear. But even if you choose not to dabble in the occult, taking a few minutes to understand how the options market works may be a worthwhile alternative.

Options can seem like black magic, eerily predicting what's going to happen in the markets in subsequent days. In the past week or so, options activity foreshadowed a takeover of tiny Internet service provider OneMain.com (ONEM Quote) by EarthLink (ELNK Quote) and helped some savvy types see a big drop in Qualcomm (QCOM Quote) coming before the rest of the world.

Here are some basic facts about the options markets that can put you on a road to understanding a complicated but potentially lucrative market. (We'll return with more in future Options Forums.)

Calls -- Up; Puts -- Down

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