STATUS | TYPE OF OPTION | AGREED TERMS |
Buyer (Holder) | Call Options | - Purchases a call option, paying a premium to the seller.
- Gains the right, but not the obligation, to buy the underlying asset at the strike price within a set time frame.
- Can exercise the option to buy the asset at the lower strike price if the market price rises above the strike price.
- Can let the option expire, losing only the premium paid, if the market price does not exceed the strike price. |
Seller (Writer) | Call Options | - Writes a call option and receives the premium from the buyer.
|
Buyer (Holder) | Put Options | - Purchases a put option, paying a premium to the seller.
- Gains the right, but not the obligation, to sell the underlying asset at the strike price within a set time frame.
- Can exercise the option to sell the asset at the higher strike price if the market price falls below the strike price.
- Can let the option expire, losing only the premium paid, if the market price does not fall below the strike price. |
Seller (Writer) | Put Options | - Writes a put option and receives the premium from the buyer.
|
CALL CREDIT SPREAD
A call credit spread, or bear call spread, entails selling a call option and simultaneously... Read More
PUT CREDIT SPREAD
A put credit spread, also known as a bull put spread, involves selling a put option... Read More