Call and Put Options
I'm trying to understand the call and put option.
Please correct me if the below is wrong.
Much appreciate for your reply and explanation.
Please correct me if the below is wrong.
Much appreciate for your reply and explanation.
Buy call options = Buyer get the premium immediately? buy at the higher than current price which expecting the price will raise in future?
Sell call options = Seller pay the premium immediately? Why need to sell it if price expect to raise?
Sell put options = Seller get the premium immediately? sell at the lower than current price which expecting the price will drop in future?
Buy call options = Buyer pay the premium immediately? Why buyer choose this?
Which one is able to buy or sell in order to receive the premium?
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Mcsnacks H Tupack : The intrinsic value of an option is the amount of money investors would get if they exercised the option immediately. It is equal to the difference between the strike or exercise price and the asset's current market value when the difference is positive. This is Used in the money or out of the money. Time value signifies whatever price an investor is willing to pay above the intrinsic value, in hopes the investment will eventually pay off.
option premium is continually changing. It depends on the price of the underlying asset and the amount of time left in the contract. The deeper a contract is in the money, the more the premium rises. Conversely, if the option loses intrinsic value or goes further out of the money, the premium falls. The amount of time left in the contract also affects the premium. The more stable a stock is also determines premium. Options are derivatives of financial securities.
Simpler terms:
A call option is a down payment on a future purchase.
A put option is an insurance policy.
Purchasing the option will carry a cost (the premium), and if the market doesn’t drop during that period, the maximum loss on the option is just the premium spent.
People who buy options are called holders and those who sell options are called writers of options
Call holders and put holders (buyers) are not obligated to buy or sell. They have the choice to exercise their rights. This limits the risk of buyers of options to only the premium spent.
Call writers and put writers (sellers), however, are obligated to buy or sell if the option expires in the money
It also implies that option sellers have exposure to more—and in some cases, unlimited—risks. This means writers can lose much more than the price of the options premium.
Mcsnacks H Tupack : Does that help?
Wonderful Day MoooooOP : Thanks Tupack.
May I know if I want to buy or to sell that can receive the premium which one I have to select?
101716588 Wonderful Day MoooooOP: You need to sell in order to receive a premium. Do remember selling a call had unlimited rIsk.
102260052 Wonderful Day MoooooOP: I would recommend you do some more reading and research on the fundamental of Options first before jumping into selling option. A good site that share abundance of Option knowledge is tastytrade.com
Wonderful Day MoooooOP 102260052: Thanks.
Wonderful Day MoooooOP 101716588: Thanks
WanaSoe : 1 like pls
ProTraderMark : thanks for sharing
Wonderful Day MoooooOP 浆糊中人 - 虫拜我吧: Appreciated on your advise. Thank you.
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