Options trading involves financial contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price (strike price) within a set time period.
There are two types: Call options (right to buy, used when expecting price increases) and Put options (right to sell, used when expecting price decreases).
The buyer pays a premium to the seller for this right. Options have an expiration date, and must be exercised within that period or they expire worthless.
Options offer the potential for large profits with small investments and can hedge portfolios. However, they're complex and can lead to significant losses.
Bangladesh's stock market doesn't yet have options trading. BSEC is working on introducing a derivatives market.