What's the difference between stocks and options

The primary difference between stocks and options lies in their nature, risk profile, and the investor's role in the company: 1. **Stocks** represent ownership shares in a company. When you buy a stock, you become a partial owner of the company, entitling you to a portion of its profits and voting rights. Stocks are suitable for long-term investors looking for gradual, stable gains as the company grows. 2. **Options**, on the other hand, are financial derivatives that derive their value from the underlying security or stock. Options give the holder the right, but not the obligation, to buy (call option) or sell (put option) a specified amount of the underlying stock at a specific price by a certain date. Options are more flexible and leverage can be used to amplify potential gains, but they also come with higher risk and are more complex. In summary, stocks are shares of ownership in a company, while options are contracts that provide the right to buy or sell stock at a future date. Stocks are generally considered lower risk and more straightforward, while options offer higher risk but also higher potential returns.