Call:
Allows you to buy stock
If you have one call that means you are able to buy that stock at your set price
It has to reach the set price on or before your contract's expiration
If it doesn't reach the set price, your contract deteriorates in value and you lose your option premium
You buy it in hopes of stock going up
As the stock price goes up, the call increases in value
Similar to going long within stocks

Put:
Allows you to sell stock (it gives you the right, but not the obligation)
For example: you own 100 shares of Microsoft at $25 and you own a put of Microsoft at $20
If the stock declines to $10/share and you have the put for that year, you can put somebody the stock at the $20 range
You buy it in hopes of stock going down
As the stock price goes down, the put increases in value
You are hoping to sell the contract later at higher value
Similar to shortselling

#stockoptions #stocktrading #stockmarket #stockputs #optionputs

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