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OptionsAs early as 1000 B.C., we can see an early characteristic of alternatives. According to the Fundamentals of Corporate Finance, Thales the Philosopher knew from the stars that there would be a great olive harvest. Thales did not have much money, but was able to purchase options for the wasting disease of olive presses. When the harvest arrived he was able to rent the presses at a substantial profit. Thales speculation on the harvest allowed for him to purchase sounds to the presses. He could then figure his rights if his speculations on the harvest were correct. An option is a contract giving the buyer the right to buy or sell an addition at a particularised outlay for a limited time. An option is a contract between the buyer and seller with defined parameters. The addition that is bought or sell is called the underlying. This underlying asset could be a commodity, a futures contract, or stock. The seller gives the buyer the rights for a sum of money called a premium. T he price that the underlying right is bought or sold at is called the exercise price. The two types of Options are Calls and Puts. When an option gives the buyer the right to purchase underlying assets from a writer is called a call option. The call option is the most straightforward strategy for capitalizing on an anticipated increase in the price of the underlying asset. The investor that buys a call option is said to be in a long call position. An investor that believes the price of an underlying asset will decline or remain the same, can if his speculations are correct, realize income by sell a call option. The seller is said to be in a short call position. When the purchaser of an option has the right to sell the underlying asset the option is called a put option. With a put option you can insure an asset by locking in a selling price. If the price of the underlying falls you can exercise your option and sell it at the locked in price. If the price of the underlying asset incr eases then you would not exercise your right and the only cost incurred is the premium paid for the option. The investor that purchases a put option is said to long put position. The investor that can earn income buy selling a put is said to be in a short put position. The people that buy ... ... However, if understood they can be very useful. They are magnificent tools for hedging and lowering risk as well as investments for profit. The option market allows for two types of transactions to be exercised at the same time buy and selling the options and being able to sell the underlying asset holdings. The Option Clearing Corporation makes sure that these day to day option trading runs smoothly. These argue are why options are a good alternative to other security trading.The Wonderful World of OptionsBibliography1.Brealey, Myers, Marcus, Fundamentals of Corporate Finance2.Fischer Robert, Stocks or Options? Programs for profit.3.Fabozzi Frank, Zarb Frank, vade mecum of Financial M arkets4.Stewart Joseph, Dynamic Stock Option Trading 5.Chicago Board Options exchange- Web site-