What are options calls and puts?

What are Options: Calls and Puts? An option is a derivative, a contract that gives the buyer the right, but not the obligation, to buy or sell the underlying asset by a certain date (expiration date) at a specified price (strike price). There are two types of options: calls and puts.

What is a call on a put (caput)?

Call on a put: CoP (CaPut)—This is a call option on an underlying put option. The owner who exercises the call option receives a put option. Call on a call: CoC (CaCall)—The investor buys a call option with the right to buy a different call option on the same underlying security.

What is a put on a call (POC)?

A put on a call (PoC) is a type of compound option whereby a put option is written on a call option. Therefore, there are two strike prices and two exercise dates.

What is the difference between a put and a call?

In some ways, puts are the opposite of calls. The buyer of a put anticipates the stock price of the option to go down, so they want to lock in the high price before it falls. The buyer of the put gets to sell their shares at a specific price. How are puts used? Puts are often compared to insurance.