What is an options contract?​

An options contract is a legal agreement between two parties: 

• One party pays a premium (the cost of the option) to gain the right to buy or sell something. 

• The other party takes on the obligation to buy or sell if the first party decides to exercise their option. 

Each contract is tied to a specific asset, has a defined strike price and expiration date, and only becomes valuable if certain conditions are met (like the asset’s price going above or below the strike). 

Options are tools that give investors flexibility, and in buffered ETFs, they’re used to control risk and tailor returns.