# Learning the Basics ## Getting Started with Options An option is a contract giving the **buyer the right, but not the obligation**, to buy (in the case of a call option contract) or sell (in the case of a put option contract) the underlying asset at a **specific price** on or before a **certain date**. Traders can use on-chain options for speculation or to hedge their positions. Options are known as **derivatives** because they derive their value from an underlying asset. Options are powerful because they can **enhance a trader’s portfolio**. They do this through added income, protection, and even leverage. Depending on the situation, there is usually an option scenario appropriate for a trader's outlook. A popular example would be using options as an effective hedge against the declining prices of an asset to limit downside losses. For more in-depth analysis of Options visit [Investopedia's Options Trading Guide](https://www.investopedia.com/terms/o/option.asp). ## Why are options used? Traders can use on-chain options as insurance on their trades, for speculation or to hedge their positions in the underlying assets. Options are known as derivatives because they derive their value from an underlying asset. Options are powerful because they can enhance a trader’s portfolio. They do this through added income, protection, and even leverage. Depending on the situation, there is usually an option scenario appropriate for a trader’s outlook. A popular example would be using options as an effective hedge against the declining prices of an asset to limit downside losses. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.oddz.fi/oddz-wiki/basics.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.