Option

An option is simply the right to buy (a ‘call’ option) or sell (a ‘put’ option) a quantity of any asset by an agreed expiry date for a fixed (‘strike’) price.

As with insurance policies, the buyer of an option pays a non-refundable premium to the seller for the right to either exercise the option before it expires, or abandon it. So, someone who holds gold and is worried about the price falling but doesn’t want to sell in case they are wrong could buy a threemonth ‘put’ option instead.

Should gold fall over the three months it can be delivered to the option seller at the higher fixed strike price rather than the market price. Should gold rise, the buyer can abandon the option, hold onto their gold and just suffers the option premium cost.

• Watch Tim Bennett’s video tutorial: What are options and covered warrants?

Paul Hodges: house prices could fall 50% in 'Great Unwinding'

Merryn Somerset Webb interviews Paul Hodges about deflation, the global economy's 'Great Unwinding', and how Britain's house prices could halve.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


28 January 1896: The world's first speeding ticket

119 years ago today, motorist Walter Arnold was caught tearing through Paddock Wood in Kent at a hair-raising 8mph, and became the first driver in the world to receive a speeding ticket.