29th June 2020

thebalance
14

What is call option and put option with example?

A call option gives the holder the right to buy a stock at a certain price (known as a strike price) by a certain date (known as an expiration). A put gives the holder the right to sell the shares at a certain price by a certain date.

In this manner, what is difference between put option and call option?

A Call Option gives the buyer the right, but not the obligation to buy the underlying security at the exercise price, at or within a specified time. A Put Option gives the buyer the right, but not the obligation to sell the underlying security at the exercise price, at or within a specified time.

Also to know, how does put option work?

A put option is a contract that gives the owner a right, but not the obligation, to sell a stock at a predetermined price (known as the “strike price”) within a certain time period (or “expiration”). The put buyer pays a premium per share to the put seller for that privilege.

Is it better to buy calls or sell puts?

The same can be said for selling a put option and buying a call option. A put buyer has the right to sell the shares at the underlying strike price, should the option move into the money, while the call buyer has the right to buy the shares at the strike.

What if no one buys my option?

If you bought options, nothing happens at all, they simply expire. If you are in a favorable position with the options you bought (i.e. they are “in-the-money”), then you may choose to exercise your options and realize your profits. You can do this by contacting your broker.
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