What are calls and puts?
A call is a bet that a stock goes up. A put is a bet that it goes down. Both are contracts with an expiry date attached, which is the thing that makes them different from simply owning the stock.
Free to read · No account needed
Calls and puts, in full.
An option is a contract. Buying a call gives you the right to buy a stock at a set price before a set date; buying a put gives you the right to sell at a set price before a set date. You are not obliged to do either — the right is what you paid for.
The set price is the strike. The set date is the expiry. Together they are why an option can expire worth nothing at all: if the stock never reaches your strike before your date, the right you bought was a right to do something not worth doing.
That is the whole difference from owning shares. A share has no clock on it. An option does, and the clock is why options can lose everything you put in while the stock itself is barely moving.
Because the clock forces people to be decisive. Somebody buying a large number of short-dated calls has told you both a direction and a deadline, which is far more information than a share purchase carries.
Words that go with it.
See it happening.
Today's market board is open to anyone, and so is the record of how our trade ideas actually turned out. Neither asks for a card.
Cancel anytime · Month to month · Switch tiers whenever