How To Buy Puts And Calls at Buying

How To Buy Puts And Calls. If you sell the option, you’re hoping the stock won’t move. You are also obligated to purchase the set amount of an underlying asset if the buyer exercises the contract.

Option selling is a popular strategy used by many professional option traders. Buying call options gives the buyer the right, but not the obligation, to buy shares of a stock at a specified price on or before a given date. In fact you can construct a put or call option by the purchase or sale of a combination of puts, calls and stock.

Buying calls or puts is not the only way to trade options. Here i have 500 shares listed. Like stocks, you buy a call or put based on your opinion of the stock’s trend, and then sell them at some point, hopefully for a profit. It is a maximum purchase price because if the market price is lower than your strike price, then you would buy the stock at the lower market price and not at the higher exercise price of your option.