The basic difference between an option put and a call is as follows:
l call option: The buyer obtains the right to purchase the underlying asset, and the seller assumes the obligation of ** the underlying asset.
l Put Option: The buyer has the right to obtain ** the underlying asset, and the seller bears the obligation to purchase the underlying asset.
Option sauce collated and released
These two can be used to carry out different investment operations through ** (long) and (short), corresponding to different strategies:
l **call: The buyer pays a premium to obtain the right to purchase the underlying asset in the future at a fixed rate. Suitable for a bullish market, where investors expect the underlying asset***
l Sell call: The seller receives a premium and needs to sell the underlying asset at a fixed ** in the future. It is suitable for bearish or sideways markets, where the investor expects that the underlying asset **will not** reach the strike price.
l **put: The buyer pays a premium to obtain the right to fix the underlying asset in the future. Suitable for bearish markets, investors expect the underlying asset***
l Sell put: The seller receives a premium and needs to buy the underlying asset at a fixed ** price in the future. Suitable for bullish or sideways markets, investors expect that the underlying asset **will not reach the strike price**.
The operation of the call and the sell put is similar in that both give the buyer the right, the difference is that the call is optional, while the sell put is obligatory and requires the obligation to buy the underlying asset when the option is exercised.
In options trading, the buyer pays a premium, and the earning potential depends on the change in the underlying asset**. Sellers receive a premium, but may be exposed to potential risks, especially in a bullish market.
For example, if the underlying asset** rises to $32, the buyer's gain will be the percentage change in the underlying asset**. Selling a $30 call option is a restrictive obligation, that is, when the underlying asset** exceeds $30, the seller may lose additional income, but the premium is the seller's income in the option transaction.