What is the difference between a call and a put option?
I want to learn options but the terms confuse me. Can someone explain call and put in simple words?
For education only. This is not financial advice. Trading carries a high risk of loss.
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1 Answer
Best answer
A call option gives the buyer the right, but not the obligation, to buy an asset at a set price (the strike) on or before the expiry date. A put option gives the right to sell at the strike.
Buyers pay a premium for this right, and their maximum loss is that premium. Sellers (writers) collect the premium but can face large losses.
Options lose value as expiry gets closer (time decay), so being right about direction is not enough. Timing matters too. Learn with paper trading first.
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