First and foremost it’s vital to understand the different elements in the phrase ‘stock option trading’.

Stock – this is the value of a company’s assets and profits. They are represented by shares and show what a company is worth in the market place.

Option – an option is a contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price within a pre-determined time frame.
Trading – when a buyer invests on the performance of an asset.
Stock option trading is when the underlying asset chosen for the option trade is stock.