Define call option and put option


If you have lost assets because your stockbroker was engaging in options trading, please contact us today. There are only two kinds of options: Articles needing additional references from October All articles needing additional references.

If a define call option and put option market advance or a major announcement by the issuer has driven the share price up sharply, your losses could be enormous. The buyer pays a fee called a premium for this right. When you hold put options, you want the stock price to drop below the strike price. The term "call" comes from the fact that the owner has the right to "call the stock away" from the seller. Determining this value is one of the central functions of financial mathematics.

From Wikipedia, the free encyclopedia. Please help improve this article by adding citations to reliable sources. This article is about financial options.

The term "call" comes from the fact that the owner has the right to "call the stock away" from the seller. From Wikipedia, the free encyclopedia. For call options in general, see Option law. For most casual investors, that definition may as well be written in ancient Greek.

Some of them are as follows:. The most common method used is the Black—Scholes formula. You let the call option expire and your loss is limited to the cost of the premium.