What is the difference between selling a call option and buying a put option?
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
You get premium for selling a Call Option.
You pay a premium to buy a Put Option.
Your profit is limited to the premium received.
Your profit is unlimited.
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.