Understanding Calls and Puts

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Call:
-Allows you to buy stock
-If you have one call that means you are able to buy that stock at your set price
-It has to reach the set price on or before your contract’s expiration
-If it doesn’t reach the set price, your contract deteriorates in value and you lose your option premium
-You buy it in hopes of stock going up
-As the stock price goes up, the call increases in value
-Similar to going long within stocks

Put:
-Allows you to sell stock (it gives you the right, but not the obligation)
-For example: you own 100 shares of Microsoft at $25 and you own a put of Microsoft at $20
-If the stock declines to $10/share and you have the put for that year, you can put somebody the stock at the $20 range
-You buy it in hopes of stock going down
-As the stock price goes down, the put increases in value
-You are hoping to sell the contract later at higher value
-Similar to short-selling

#stockoptions #stocktrading #stockmarket #stockputs #optionputs

Posted at: https://tradersfly.com/blog/the-basics-of-calls-and-puts/

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All of the stocks mentioned in this video along with any other videos we have are opinions and not investment, financial or legal advice. These videos are for general education, information, and entertainment. Do your own due diligence and consult with a registered financial advisor before taking any position since everyone has a different risk tolerance.

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