Option types

There are two types of options:

  • Call: gives the owner the right to buy a specified number of shares of the underlying stock at the strike price up to the set expiration date.

  • Put: gives the owner the right to sell a specified number of shares of the underlying stock at the strike price up to the set expiration date.
When you buy a call or put option you must pay a premium, which is calculated per share. Conversely, when you sell a call or put option, you collect the premium.


Option type Action Example
Call Buy 100 shares x premium per share = net debit of call option.
Call Sell 100 shares x premium per share = net credit of call option.
Put Buy 100 shares x premium per share = net debit of put option.
Put Sell 100 shares x premium per share = net credit of put option.
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