What you are describing is short-selling. An option is a contract to buy (or sell, depending on the option) 100 shares of some stock at a set price, which expi

What you are describing is short-selling. An option is a contract to buy (or sell, depending on the option) 100 shares of some stock at a set price, which expires at the end of a set day (usually the 3rd Friday). This contract costs some premium, which is lost if the option expires before the owner exercises it. You can indeed make a lot of money just holding the option until it is worth more, and it can jump several multiples of the original price, especially on unexpected price movements. As the option cannot have a negative price, your losses are capped at whatever you spent on them.