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what is an options account?
user
options are a derivative product, and in this case, derive their value from an underlying security, a traded stock. an option gives you the right, but not the obligation, to buy a stock at a given price (the strike price) by a given time (the expiration date.) what i just described is a call option. the opposite instrument is a put, giving you the right, but not the obligation, to sell the stock at a given price.  volumes have been written on the subject, but i'd suggest that for a custodial roth, i'd not activate the ability to trade options.  how to get started with options investing? offers a nice introduction to trading options. in my response, i offer an example of a trade that's actually less risky due to the option component.
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