What is the difference between selling puts and buying calls?

In summary, with selling puts, you risk being assigned the contract (assignment), but you earn a premium upon selling; while buying calls grants you the option to purchase stock at a set price, and max loss is capped. Both have their benefits, but they come with different risk profiles, rewards, and ideal market scenarios.

What happens if you sell a call or put option?

The seller of a call or put option, on the other hand, has the obligation to sell or buy the underlying asset, respectively, if the holder chooses to exercise the option. When you sell a call option, you're agreeing to sell the stock at the specified strike price if the holder exercises the option.

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

A call option is the right to buy a stock at a specific price by an expiration date, and a put option is the right to sell a stock at a specific price by an expiration date. That's the short summary of these options contracts. Now, let's take a closer look at how call and put options work, as well as the risks involved with options trading.