Which of the following are the two main types of options?

Prepare for the 2025 CFORCE Options exam with detailed multiple-choice questions. Learn with hints and comprehensive explanations to ensure readiness and confidence for the test day!

The two main types of options are call options and put options. A call option gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a certain timeframe. Investors typically purchase call options when they anticipate that the price of the asset will rise, allowing them to make a profit by buying the asset at a lower price than the market value.

On the other hand, a put option grants the holder the right, but not the obligation, to sell an underlying asset at a specified price within a certain timeframe. This is a strategic move for investors expecting the price of the asset to decline, as it allows them to sell at a higher predefined price than the market value.

Understanding these two main types—call options and put options—is essential for engaging in options trading and implementing various strategies depending on market conditions and price predictions. The other options listed incorporate terms that either do not represent standard options types or refer to strategies rather than the basic forms of options.

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