What is the difference between a call and a put option?

Options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. The right to buy is called a call option and the right to sell is a put option. Each contract is typically worth 100 shares of the underlying stock.

What are calls & puts?

Since everyone understands that calls and puts are options, they are often just referred to as “calls” and “puts”. Options are just one kind of financial derivative, so I will start by discussing derivatives in general. options, forwards, futures, and swaps. price agreed upon at the time the contract is struck.

What is a call option?

A call option is a financial contract that gives the holder the right, but not the obligation, to purchase a certain underlying asset at a certain price, known as the strike price. For example, ABC Corporation is trading at $120. A one-month call option is trading for $3.50.