What is your understanding of call and put options?

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Accepted Answer

Call options give the holder the right to buy an asset at a specified price, while put options give the holder the right to sell an asset at a specified price.

Call options are used when the investor believes the price of the asset will rise above the strike price before the expiration date.
Put options are used when the investor believes the price of the asset will fall below the strike price before the expiration date.
Options are contracts that give the holder the right, but not the obligation, to buy or sell an asset at a specified price within a specific time period.
Call and put options are commonly used in financial markets for hedging, speculation, and risk management.
Example: A call option on a stock with a strike price of $50 gives the holder the right to buy the stock at $50, even if the market price is higher.
Example: A put option on a commodity with a strike price of $100 gives the holder the right to sell the commodity at $100, even if the market price is lower.

What is your understanding of call and put options?

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