What is a Put and a Call?

by Raviranjankhan
(korba(c.g)india)

Question: What is a Put and a Call?

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Hi Raviranjankhan,
Thanks for submitting your question.

Answer: These are both basic Stock Option contracts with different underlying purposes. Each Option contract can represent an individual stock, ETF or Index for example.

A Call Option is a contract that gives the buyer of the Call the right, but not the obligation, to buy shares of the represented stock (or other represented security) at some point in the future at a pre-determined price.

A Put Option is a contract that gives the buyer of the Put the right, but not the obligation, to sell shares of the represented stock (or other represented security) at some point in the future at a pre-determined price.

Besides using Options for short term trading strategies, they can be used in conjunction with a long term investing strategy as well.

Like any other new area you may be venturing into, make sure you take time to learn as much as possible first, to fully understand how it works and the potential outcomes.

I hope this information helps,
Larry
Online Stock Trading Guide

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