Buying And Б─■ Selling Calls And Puts

: Realized if the stock price drops below the strike price minus the premium paid. 3. Selling Options (Writing "Short")

: This is the price you pay (as a buyer) or receive (as a seller) for the contract. If an option is quoted at , the actual cost is

The Complete Guide to Buying and Selling Calls and Puts Options trading provides flexibility beyond simple stock ownership, allowing you to profit from upward, downward, and even sideways market movements. This guide breaks down the four essential moves every trader must master: buying calls, buying puts, selling calls, and selling puts. 1. The Core Building Blocks buying and selling calls and puts

Before placing a trade, you need to understand the basic mechanics:

: Realized if the stock price moves above the strike price plus the premium paid. Long Put (Bearish) Goal : You expect the stock price to fall . Right : You can sell the stock at the strike price. Risk : Limited to the premium paid. : Realized if the stock price drops below

When you sell an option, you receive the premium upfront but take on an if the buyer chooses to exercise their right. Short Call (Bearish or Neutral) Options Trading Basics | How to Buy & Sell Calls and Puts

: The "deadline" for the contract. Unlike stocks, options do not last forever; they expire on a specific date. 2. Buying Options (Going "Long") If an option is quoted at , the

: One standard equity option contract typically controls 100 shares of the underlying stock.