Options Trading - Art or Science ?

What is an Option? An option gives the holder the right, but not the obligation to either buy or sell some stated underlying asset at an agreed exercise price ('strike price'), either before or at some fixed date. In a legal sense an option can be categorised as a 'contingent claim' contract. The seller of an option (also known as a 'writer') grants the purchaser this right (option) in return for the payment of an option 'premium'. The buyer of an option has a risk limited to the premium money paid, with a theoretically unlimited profit in the case of a call and in the case of a put, the value of the option price minus 0, at the maximum. Likewise, the seller has a limited profit (in both cases, the premium monies) and an unlimited risk in the case of an uncovered written call, uncovered being where an option writer does not own the underlying stock. In the case of a put the loss is limited to {strike price minus O} again.