Call Option vs Put Option

Explore in this story the difference between Call Option and Put Option>>

Understanding Call Options

Call options permit you to purchase an asset at a fixed price if you assume the price will go up.

Understanding Put Options

Put options permit you to sell an asset at a fixed price if you expect the price to drop.

Key Terms in Options

Strike price: Pre-agreed price. Premium: Cost of the option. Expiration: Date the option expires.

Buying Call Options

Buy a Call if you anticipate the stock price will increase and profit from the difference if the price goes up.

Buying Put Options

Buy a Put if you anticipate the stock price to decrease. Exercise the option at the strike price to limit losses in case of a price drop.

Selling Options

Call sellers assume stable prices; put sellers anticipate rising prices. Both profit from premiums paid by buyers.