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Stocks Versus Options

The foremost difference between stocks and options is that possessing shares of a stock implies actually owning a part of a company. In the case of options the purchased option is simply a contract granting rights to an underlying stock. Owning a option does not mean owning shares of a stock.

Also, when you buy a stock, you buy an existing security. However, in the case of options, a seller of a contract creates the security that is purchased by the buyer of the contract.

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