Basis
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Call Options
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Put Options
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Definitions
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A call option is a contract which grants the right to the option holders (Stock buyer) but not obligation to buy specified numbers of common stock at stated price in specified date.
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A put option is a contract which grants the right to the option holders (Stock Seller) but not obligation to sell specified numbers of common stock at stated price in specified date.
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Right
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In call option, the stock buyer (Call Option holder) has right to buy.
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In put option, the stock seller (Put option holder) has right to sell.
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Obligation
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In call option, the option writer (Stock Seller) has obligation to sell if option holder (stock buyer) wants to buy.
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In put option, the option writer (Stock buyer) has obligation to buy if option holder (stock seller) wants to sell.
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Profit
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In call option, there is no upper limit of option holder’s profit if the stock prices increases continuously.
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In put option, the profit is limited for the option holder. The stock seller (option holder) earns profit until the stock price equal to zero.
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Figure
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Gambling refers to the activity or practice of playing a game of chance for money or other stakes. For example, if you spend some mon...
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