CALL and PUT
Wednesday, September 24, 2008 by RonHyg Techie's
Call Option
When you buy a call option, it gives you the right to buy a given asset at a fixed price (known as the strike price) anytime before a specified expiration date. The option writer (the person who created the option which you purchased), has the legal obligation to sell the asset to you at the strike price, if you exercise the option before the expiration date.
Put Option
A put option is just the opposite. When you buy a put option, it gives you the right to sell a given asset at the strike price anytime before the expiration date. The option writer has the legal obligation to buy the asset from you at the strike price if you exercise the option before it expires.
Underlying
The asset is usually referred to as the Underlying (underlying asset). Options are available for the following types of underlyings:
Futures (Commodities, Indexes, Currencies). Gold, silver, soybeans, wheat, crude oil, treasury bonds, eurodollars, foreign currencies, S&P 500 index, and many others.
When you buy a call option, it gives you the right to buy a given asset at a fixed price (known as the strike price) anytime before a specified expiration date. The option writer (the person who created the option which you purchased), has the legal obligation to sell the asset to you at the strike price, if you exercise the option before the expiration date.
Put Option
A put option is just the opposite. When you buy a put option, it gives you the right to sell a given asset at the strike price anytime before the expiration date. The option writer has the legal obligation to buy the asset from you at the strike price if you exercise the option before it expires.
Underlying
The asset is usually referred to as the Underlying (underlying asset). Options are available for the following types of underlyings:
Futures (Commodities, Indexes, Currencies). Gold, silver, soybeans, wheat, crude oil, treasury bonds, eurodollars, foreign currencies, S&P 500 index, and many others.
