An options contract is an advanced financial instrument that basically gives someone the right to purchase something in the future for a pre-determined price. If I have an option to buy apple shares for $20 at the end of 2021 and they are actually trading for $30 dollars when that time comes I make a profit of $10 dollars for every option I had.
Now you might think that this is a modern system but in reality, it was pioneered by a Greek philosopher in 600BC.
Thales saw an opportunity and put deposits on every olive press in Greece, when summer came around and the olives were ready to be turned into oil, he simply refused to let anybody use them because he had already paid the deposit on them for use at the time.
Eventually farmers agreed to pay double the normal rental fee to Thales to let them use the presses before their crops went to waste, and so the first options profit was derived.
#Shorts #Finance #HowMoneyWorks #Stonks
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