Calls v/s puts

Disclaimer: The information provided is solely for educational purposes and does not constitute a recommendation to buy, sell, or otherwise deal in investments.

Call Option: Its price will increase when the stock goes up and/or the volatility increases. Put Option: Its price will increase when the stock goes down and/or the volatility increases.

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Call Option: It is bought when the market view is bullish and sold then the market view is bearish. Put Option: It is bought when the market view is bearish and sold when the market view is bullish.

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Call Option: Call buyer has the right to buy the stock. Call seller has the obligation to sell the stock. Put Option: Put buyer has the right to sell the stock. Put seller has the obligation to buy the stock.

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Call Option Payoff Diagram

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Put Option Payoff Diagram

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Calls v/s puts

Call Option: Its price will increase when the stock goes up and/or the volatility increases. Put Option: Its price will increase when the stock goes down and/or the volatility increases.

How does the price increase?

Call Option: It is bought when the market view is bullish and sold then the market view is bearish. Put Option: It is bought when the market view is bearish and sold when the market view is bullish.

When are they usually bought?

Call Option: Call buyer has the right to buy the stock. Call seller has the obligation to sell the stock. Put Option: Put buyer has the right to sell the stock. Put seller has the obligation to buy the stock.

Obligations?

Call Option Payoff Diagram

X = Strike Price Y = Breakeven

Put Option Payoff Diagram

X = Strike Price Y = Breakeven