In stock option trading, what are "puts" and "calls"?

Answer 1

call: An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

i.e. if you buy an option for company xyz at a strike price of $25, you can force the seller of the option to sell you that stock at $25 in the specified time period. If the company stock goes up to $30 in that period, you get to buy that stock from the seller at $25.
Buyers of calls hope the stock will go up in value during that time period.

puts: An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Different from buyers of calls because buyers of puts believe the price of the stock will decrease during the specified time period.

i.e. If a buyer buys a put for company xyz at a strike price of $25, the buyer will be able to sell the stock at $25 to seller of the put contract. If the stock drops to $20, the buyer of the put contract can force the seller of the contract to buy the stock at $25 instead of $20.

each put and contract is equal to 100 shares of the underlying contract. an excercise of one call contract of xyz options will be involve the buyer receiving 100 shares of company xyz. options expire in the third week of whatever month it expires. if you bought a march contract, the option expires on the third friday of march. if the buyer chooses to not execute the option before expiration, the contract expires worthless.

Answer 2

A put option is the right to sell a certain stock at a given price, a call option is the right to buy at a certain price. Buying or selling either comes from a beleif that the stock is going to rise or fall away from your price, thus creating a premium for you when you exercise or sell the option

Answer 3

Call
1. The period of time between the opening and closing of some future markets wherein the prices are established through an auction process.

2. An option contract giving the owner the right (but not the obligation) to buy a specified amount of an underlying security at a specified price within a specified time.

Put

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time. The buyer of a put option estimates that the underlying asset will drop below the exercise price before the expiration date.

Answer 4

put option is the right to sell a certain stock at a given price, a call option is the right to buy at a certain price. Buying or selling either comes from a beleif that the stock is going to rise or fall away from your price, thus creating a premium for you when you exercise or sell the option

Answer 5

A "PUT" option is the right to sell an underlying security at a set (STRIKE) price.
A "CALL" option is the right to buy and underlying security at a set (STRIKE) price.

If you bought a Jun 2007 IBM $120 PUT option, this means you have a right to sell your IBM stock for $120 per share anytime before the expiration date in June.
All stock options expire on Saturday following the third Friday of the expiration month.
Visit www.888options.com to learn more, this is wonderful site sponsored by The Options Clearing corporation and Options Industry Council.

Answer 6

The link below is a pdf for the Chicago Board Options Exchange (CBOE) and the Options Clearing Corporation. It will tell you a lot about options (they are a different dog today than when I first traded them in the 1970s, oops TMI).

Answer 7

Put - is to sell
call - is to buy

Put option - the buyer of the potion can have the right to sell

call option - the seller has the option to buy the option back