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Call option is a contract through which buyer gets the “Rights to Buy” the stocks at the strike price on the expiry date of the contract. Seller signs the contract but do not have any rights on the contract. Buyer do not have any obligations.
Put Option is a contract through which buyer gets the “Right to Sell” the stocks at the strike price on the expiry date of the contract. Seller signs the contract but do not have any rights on the contract. Buyer do not have any obligations.
Seller gets the Premium amount for signing the call/put option contract, where the premium is traded between buyer and seller.
Call Option: The buyer gets the “right to buy” asset from the seller of the contract,when the share hits the strike price.
The buyer needs to pay premium to the seller for signing the contract.The buyer does not have any obligation.
Put Option: The buyer gets the “right to sell” asset from the seller of the contract ,when the share hits the strike price.
The buyer needs to pay premium to the seller for signing the contract.The buyer does not have any obligation.
Depending on the strike price ,the premium will be fixed by the exchange.
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Call option is a contract through which buyer gets the “Rights to Buy” the stocks at the strike price on the expiry date of the contract. Seller signs the contract but do not have any rights on the contract. Buyer do not have any obligations.
Put Option is a contract through which buyer gets the “Right to Sell” the stocks at the strike price on the expiry date of the contract. Seller signs the contract but do not have any rights on the contract. Buyer do not have any obligations.
Seller gets the Premium amount for signing the call/put option contract, where the premium is traded between buyer and seller.
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in call option the buyer has the rights to buy the stock at strike price on the maturity date but has no obligations
in put option the buyer has the rights to sell the stock at the strike price on the maturity date but has no obligations
in both cases seller has obligations but has no rights and receives a premium to sign the contract based on the strike price.
Call option – The buyer has the rights to buy which are given to him by the seller but has no obligation. On the other hand, the seller has no rights but only obligations. The buyer makes profit if the price goes above the strike price.
Put options – The buyer has the right to sell which are given to him by the seller but has no obligation. On the other hand, the seller has no rights but only obligations. The buyer makes profit if the price goes below the strike price.
In both the cases, the seller receives the premium and occur loss only if the increase/decrease of current market price as compared to the strike price is more than the premium amount.
Premium is decided by the seller and buyer.
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