What is call option and put option?

Put Option

Call Option

Give rights, not the obligation to buy

Give rights, not the obligation to sell

When the investors expect the price to go up, they put a strike limit to sell the shares before the expiry date.

When the investors want to purchase the stock, they put a strike limit to buy the shares before the expiry date.

The underlying stock has no value if the stock is priced below the strike price in a defined duration.

The underlying stock has no value if the stock is priced above the strike price in a defined duration.

You can buy a put option with At, In or Out of the money where the value depends on the difference between underlying price and strike price.

You can buy a call option with At, In or Out of the money where the value depends on the difference between underlying price and strike price.

If you want to buy shares of TCS at a strike price of Rs 1950 for May, you have to put the premium amount and lot size information. Now, if the price of the stock is below than the strike price in the duration, you will get the shares and earn profits. If the option is not exercised in the period, the investor will lose the premium amount only.

If you want to sell shares of TCS at a strike price of Rs 2500 for May, you have to put the premium amount and lot size information. Now, if the price of the stock is higher than the strike price before expiry, you will sell the shares at profits. If the option is not exercised in the period, the investor will lose the premium amount only.