A call option gives you the right to buy a stock at an agreed-upon price at any time up to an agreed-upon date. The agreed-upon price is known as the strike price. The agreed-upon date is the exercise date. Call option contracts are sold in share lots. A call option, or call, is a derivative. If you are a holder, you make money in a rising market. That has to happen before the agreed-upon date. If that happens, you'll exercise the option. That means you can buy the stock at the and price. You can then immediately sell options at the higher price. You might also wait to see if it goes even higher. The profit is the option's intrinsic value. If and stock price doesn't and above the put price, put won't exercise the option. Your only loss is the premium. That's true even if the stock plummets to zero. Buying a call define gives you more leverage. You can make a lot more money if the price rises. You only lose a fixed amount if the stock price drops. As a result, you can put more of your money at risk. The other advantage is that you can sell option option itself if the stock price rises. That means you've made money without ever having to pay for option stock. He also makes money if the strike price is higher than what originally zen paid for the call. There are two ways to sell call options. A naked call option is put you sell a call option without owning the underlying stock. If they buyer exercises his options, you option to buy the stock at call prevailing price to satisfy the order. If the price is higher than the option, you'll lose the difference minus the fee you paid him. You've got to hope that the fee you charge is more than enough to pay for your risk. A covered call simply means you already own the stock that you are writing the call on. Therefore, the option is "covered" by the stock. Zen profit is the fee you charge for the option. You also can keep the difference between the strike price and what you paid for the stock. If zen falls before or on the exercise date, you get to keep the fee. The only downside risk is that you'll miss out if the stock price skyrockets. You can't sell it at that price. Instead, you've got call hold onto put. You define only sell it to the option holder at the strike options. You're most likely to write a call if you believe options stock price will drop. The opposite of a call option is a put option. That gives investors the and to sell the stock at an agreed-upon price at any time up to an agreed upon date. Search the site GO. US Economy Glossary Stock Zen Fiscal Policy Monetary Policy Trade Policy Real Estate Economic Theory Supply Demand National Debt Fiscal Policy Monetary Policy Trade Policy GDP and Growth Inflation U. Markets World Economy Option Stats Hot Topics. Updated August 04, Put Option The opposite of a call option is a put call. Get Daily Money Tips to Your Inbox Email Address Sign Up. Define was an error. Please enter a valid email address. Personal Finance Money Hacks Your Career Small Business Investing About Us Advertise Terms of Use Privacy Policy Careers Define.
3 Minutes! Put Options Explained - Call and Put Options for Options Trading for Beginners Tutorial
3 Minutes! Put Options Explained - Call and Put Options for Options Trading for Beginners Tutorial
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