Buying Call Option V/s Selling Put Option

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You buy call option or sell put option when you are aggressively bullish about the markets.

Let's learn about their differences.

1. Margin

Buying Call requires no margin deposit with broker. You need to deposit high margin amount for selling a put.

2. Risk/Reward

Buying call has unlimited profit potential and limited loss potential. Selling a put has unlimited loss and limited profit potential.

When is it favorable to buy call?

When the implied volatility is low and there is plenty of time until expiry, a call option can be purchased. 

When is it favorable to sell put?

When the implied volatility is high and there is less time till expiry, a put can be sold. 

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