Results for “Call option vs Put option”

Call option and Put option, side by side

Call option

A call option is a contract giving its buyer the right, but not the obligation, to buy an asset at a fixed strike price on or before an expiry date. The buyer profits if the price rises far enough above the strike to cover the premium paid.

What it means for you. A call buyer's maximum loss is the premium, and the price has to rise above the strike plus the premium just to break even. A call seller keeps the premium but must sell at the strike however high the price goes, so a call sold without holding the asset can mean unlimited loss.

Sources: SEC Investor Bulletin: An Introduction to Options, CFTC Glossary · checked 4 October 2026

Put option

A put option is a contract giving its buyer the right, but not the obligation, to sell an asset at a fixed strike price on or before an expiry date. The buyer gains if the price falls far enough below the strike to cover the premium paid.

What it means for you. Holders of an asset sometimes buy puts as insurance against a fall; the cost is the premium, lost entirely if the price stays above the strike. A put seller collects the premium but must buy at the strike even if the asset has collapsed.

Sources: SEC Investor Bulletin: An Introduction to Options, CFTC Glossary · checked 4 October 2026

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