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The Ins and Outs Of How Options Trading Works Options are purchasing the "option" to buy or sell a security if it reaches a goal price at a certain time. For example, say I want to buy (and this would never happen, it's just easier to think about when you aren't talking securities and are talking objects we buy daily) tomatoes. I want 40 tomatoes, but not at $1.50 each. I want them in 30 days, so if in 30 days, those tomatoes go below $1.20 each, I will buy 40 tomatoes. Why Options Trading Works and Has the High Payouts You may wonder, what is this buzz I keep hearing about options? Options are contracts giving the purchaser the right to buy or sell a security (stocks) at a set price for a set amount of time. Options come in many types, and the business of options trading is generally high risk. The buzz is created by the people who have the knowledge of when to buy, and more importantly, when to sell. Naturally, because trading options is high risk, the payout is extremely high.