What is an Option?——learn about Call and put

Tiger_Academy
2022-02-11


What’s an option, you ask?

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.So far, we understand what an option is. An option is a contract between the buyer and the seller. What does this contract represent? The buyer and the seller of an option agree to buy or sell an asset at an agreed price at or before a specific time in the future.The assets bought or sold can be stocks, indexes, futures, etc.The option you just bought from Tim is called a "call option" or "call" for short.

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.

Related Articles & Videos

Tiger Options Tour For Beginners to learn

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Jeff2022
    2022-03-19
    Jeff2022
    Thank you! Super easy to understand and this is the best article to explain call and put options. 👍
  • Willo88
    2022-03-01
    Willo88

    Sharing for save keeping on my published page too for future reference

  • Blessed Moo
    2022-03-24
    Blessed Moo
    Good information for beginners. Thanks!
  • RktCapital
    2022-02-15
    RktCapital
    There’s a youtuber ‘Invest with Henry’ share a lot of good knowledge and strategy in options. I personally learn from him.
  • NareshwG
    2022-04-29
    NareshwG
    //@Lenaz: Great ariticle, would you like to share it?
  • Mic6226
    2022-03-30
    Mic6226
    Good lerning and advice💪🏻
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