asked
A Call Option gives you the right but not the obligation to buy the underlying at a specified price and within a specified period. A Put Option, on the other hand, gives you the right to sell the underlying at a specified price and within a specified period.
You sell a Call Option or buy a Put Option when you are bearish on the market and want to profit from the downward movement in prices of the underlying.
Difference between selling a Call Option and buying a Put Option
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You get premium for selling a Call Option. |
You pay a premium to buy a Put Option. |
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Your profit is limited to the premium received. |
Your profit is unlimited. |
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You can incur unlimited losses if there is a significant increase in the price of the underlying. |
Your losses are limited to the premium paid plus brokerage paid. |
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