What is the difference between a call option and put option?
An option is a financial instrument that gives you the right but not the obligation to buy or sell a specific underlying financial instrument at a specific price within a set period of time.
All “financial instrument” means is something that can be bought and sold. Once you buy an option, you can resell it to another investor for a profit or loss.
Also, notice that options give you a “right” — not an obligation. That is, you choose whether or not you want to exercise that right. An option gives you “the right to buy or sell a specific underlying instrument”… but not both.
When you buy the option, you must choose whether you expect to profit from a rise or fall in the price of the underlying stock.
If you expect the stock to rise, you buy what’s called a “call option.”
If you expect it to fall, you buy a “put option.”
But first, there are a few things you should know…
Every stock option — no matter what stock it’s for — allows you to control 100 shares of stock. Unlike when you buy a stock, however, buying options limits your risk. You lose only the amount you paid to buy the options. And your profits are practically limitless.
For more information on options investing, click here to view our primer.
- How do I remove my subscription from automatic renewal?
- How do I unsubscribe?
- What is my refund policy?
- How To Trade Our Research
- How do I cancel a renewal of my subscription?
- How can I the find the expiration date of my subscription?
- Who is Bill Bonner?
- What is the 5 Minute Forecast?
- How and when will my money be returned to me?
- When will I be charged for automatic renewal?
If you are having trouble and cannot find the information you are looking for, please contact us and we will respond as soon as possible.Contact Us
Each of our publications are delivered at different times. View when you can expect each of our publications to be delivered to you.View Publishing Schedule
- About Agora Financial
- Agora Financial Reserve Memberships
- Credit Card Statement Information
- Emails from Agora Financial
- Exchanges (Coinbase & Bittrex)
- Frequent Investment Questions
- Fund Transfers
- General Crypto Questions
- Getting Started with my Subscription
- My Account Information
- My Privacy
- Need More Help?
- Orders and Payments
- Publications and Editors
- Refund Policies
- Subscription Renewal
- Using the Website
- Wallets (Trezor)