: Realized if the stock price drops below the strike price minus the premium paid. 3. Selling Options (Writing "Short")
Before placing a trade, you need to understand the basic mechanics: buying and selling calls and puts
: This is the price you pay (as a buyer) or receive (as a seller) for the contract. If an option is quoted at , the actual cost is : Realized if the stock price drops below
The Complete Guide to Buying and Selling Calls and Puts Options trading provides flexibility beyond simple stock ownership, allowing you to profit from upward, downward, and even sideways market movements. This guide breaks down the four essential moves every trader must master: buying calls, buying puts, selling calls, and selling puts. 1. The Core Building Blocks If an option is quoted at , the
: One standard equity option contract typically controls 100 shares of the underlying stock.