The earliest known options were bought around 600 BC by the Greek philosopher Thales of Miletus. He believed that the coming summer would yield a bumper crop of olives. To make money off this idea, he could have purchased olive presses, which, if you were right, would be in great demand, but he didn't have enough money to buy the machines. So instead he went to all the existing olive press owners and paid them a little bit of money to secure the option to rent their presses in the summer for a specified price. When the harvest came, Thales was right, there were so many olives that the price of renting a press skyrocketed. Thales paid the press owners their pre-agreed price, and then he rented out the machines at a higher rate and pocketed the difference. Thales had executed the first known **call option**. A call option gives you the right but not the obligation to buy something at a later date for a pre-specified price, known as the **strike price**. A **put option**, on the other hand, gives you the right but not the obligation to sell something at a later date for the strike price. The former are useful if you expect the price to go up, the later if you expect it to go down. The price of the option itself is called a **premium**. If you don't execute the option, you lose the premium. This also means that if things don't go the way you anticipated, you *only* lose the premium, thus limiting your exposure to risk.