What is an Option?——learn about Call and put
Let’s start with the simple definition: a “stock option” is a contract to buy or sell a particular stock at a specified price for a limited period of time.
Make good use of options to diversify and enrich your investments. Learn from me now!
Suppose there is a guy, call him Tim if you will.
Tim says, "I will allow you to buy 100 Tesla shares from me at the price of USD 1200 a share at any time in the next 30 days, on the condition that you give me USD 100 now.
If you don't want to buy the shares in the end, you will not get the USD 100 back." What do you think?
First of all, of course, check the current Tesla price, and then evaluate the possibility that Tesla's share price will exceed USD 1200 within 30 days.If you think everything looks good, you pay USD 100 and a contract is established between you and Tim.
This is called an options contract. You pay for a right, and Tim receives your money in return for bearing the corresponding obligations.
You buy a call when you believe the stock price will rise. When you exercise your right, you call the stock from the seller.Buying a call option allows you to lock in the price in advance to "pre-purchase" promising assets.
What about the other way around? You can find the answer in the next video.
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