What is call option and PUT option? Who decide the premium?

[Raja Kannan]

Call Option means Buyer gets the “right to buy” stocks from the seller of the contract, when the share hits the strike/agreed price.

The buyer needs to pay premium to the seller for signing the contract however buyer does not have any obligation to fulfill the contract.

Put option means Buyer gets the “right to sell” asset  from the seller  of the contract ,when the share hits the strike/agreed price.

The buyer needs to pay premium to the seller for signing the contract however buyer does not have any obligation to fulfill the contract.

Depending on the strike price ,the premium will be fixed by the exchange.

[Ganesh]

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.

[Guru]

<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”><strong style=”box-sizing: border-box;”>Call Option means Buyer gets the “right to buy” stocks from the seller of the contract when the share hits the strike/agreed price.</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>The buyer needs to pay the premium to the seller for signing the contract, however, buyer does not have any obligation to fulfil the contract.</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”><strong style=”box-sizing: border-box;”>Put option means Buyer gets the “right to sell” asset from the seller of the contract when the share hits the strike/agreed price.</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>The buyer needs to pay premium to the seller for signing the contract however buyer does not have any obligation to fulfill the contract.</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>Depending on the strike price ,the premium will be fixed by the exchange.</p>

[Hassain]

Call option :

1.Buyers does not have any obligation

2.buyers has the right to buy

3.sellers has to sign the contract by getting the premium from the buyers

4.whenever the share price increases beyond the agreed strike price The seller is liable to pay the increases amount

Put option:

1.buyer does not have obligation

2.buyer has right to sell.

3.seller has to sign the contract by getting premium from the buyer

4.the seller is liable to pay the price to buyer whenever the share price goes less than the strike price.

 

 

[Sriram Raghavendran]

Call option – Buyer gets right to buy but no obligations to seller. Whenever share price goes above strike price agreed in contract, seller has to pay the increase in the amount.

Put option – Buyer gets right to sell but no obligations to seller. Seller signs contract by getting premium from buyer. Seller pays amount to buyer whenever share price goes lower than strike price.

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