Put vs Call Options
There are 2 fundamental options
which are the call option
and the put option.
All options are sold in the form of a 100 share contract
You are buying or selling 100
shares of say a ABC stock
All options trading strategies,
involve contract length and hedging with the 4 types of option contract
options.
You
can either buy or sell (write) options
If you buy options you have to pony
up a small fee per contract which gives you the option to
either
Purchase their shares “call option”
on or before the contract end date, or
Sell shares you own “put
option” to the other party in the contract.
You can see, the option is yours
because you paid a fee for that right.
Of
course, for every contract purchased, someone has to be selling it
But you too can be a seller. Bear in mind, you have no control of
what
happens once you sell a contract. You are obligated to do whatever the
purchaser decides. The option is theirs.
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