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What is call and put option in simple words


A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock. Think of a call option as a down payment on a future purchase. Options involve risks and are not suitable for everyone.

What is call option in simple words?

A call option is a contract between a buyer and a seller to purchase a certain stock at a certain price up until a defined expiration date. The buyer of a call has the right, not the obligation, to exercise the call and purchase the stocks.

What is call and put with example?

A call option is a right to buy an underlying asset or contract at a fixed price at a future date but at a price that is decided today. On the other hand, the put option is the right to sell an underlying asset or contract at a fixed price at a future date but at a price that is decided today.

What is difference between call and put?

The term "put" comes from the fact that the owner has the right to "put up for sale" the stock or index. Puts may also be combined with other derivatives as part of more complex investment strategies, and in particular, may be useful for hedging.




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