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In Call option, the person has the rights to buy the equity without obligation. That means he will use the contract only if it is favourable to him. The person who has rights to buy is called as call option buyer and other person is call option is known as call option seller.
In Put Option, the person has the rights to sell the product without obligation. He a=may execute the contract only if it is favourable to him. The person who has the rights to sell is known as put option buyer and other person is known as put option seller.
Premium is a token of advance to minimise the risk and as well as it is a motivation to the counter party to sign such Contracts. It is decided by both buyer and seller based on the bargain.
<span style=”color: #000000; font-family: Arial, sans-serif;”>Buyer of a call option has the right, but is not obligated, to buy an agreed quantityof stocks or bonds at a future date for a certain price (the strike price).This is a Call Option. </span>
<span style=”color: #000000; font-family: Arial, sans-serif;”>Buyer of a put option has the right, but is not obligated , to sell an agreed quantity by a certain date for the strike price.This is called as Put Option.</span>
The premium is decided by the current stock price , intrinsic value , time of expiry of the contract and various other factors.This is market dependent and is not in the control of any individual.
Call option – The buyer of the contract has the rights to buy at the strike price
Put Option -The buyer of the contract has the right to sell at the strike price
The buyer and seller decides the premium
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>Call option – The buyer of the contract with rights to buy at the strike price</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>Put Option -The buyer of the contract with right to sell at the strike price</p>
<p style=”box-sizing: border-box; margin: 0.85em 0px; direction: ltr; color: #777777; font-family: ‘Roboto Slab’; font-size: 13px;”>Premium is decided by both – buyer & seller</p>A put option is an option contract giving the owner the right but not the obligation to sell a specified amount of an underlying security at a specified price with a specified time. This is the opposite of a call option, which gives the holder the right to buy shares
The option premium is primarily affected by the difference between the stock price & the strike price, the time remaining for the option to ensure exercised & the volatility of the underlying stock
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