{"id":22393,"date":"2022-04-23T13:04:25","date_gmt":"2022-04-23T13:04:25","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=markets&#038;p=22393"},"modified":"2025-10-10T21:10:47","modified_gmt":"2025-10-10T15:40:47","slug":"summarizing-the-difference-between-call-and-put-option","status":"publish","type":"markets","link":"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/summarizing-the-difference-between-call-and-put-option\/","title":{"rendered":"Call and Put Option: Meaning, Difference, Risk &#038; Rewards Related To Options"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"22393\" class=\"elementor elementor-22393\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-23ba90b elementor-section-full_width tab_container elementor-section-height-default elementor-section-height-default\" data-id=\"23ba90b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b6a6f9f\" data-id=\"b6a6f9f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-e0f864e elementor-section-full_width elementor-section-height-default elementor-section-height-default\" data-id=\"e0f864e\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-wide\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-7efb245 chapters_list\" data-id=\"7efb245\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-33d4575 elementor-widget elementor-widget-shortcode\" data-id=\"33d4575\" data-element_type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\">\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery(\"#post_chapters a[href*='\" + location.pathname + \"']\").addClass(\"current\");\n\t\t})\n\t<\/script>\n\t<div class=\"desktop_chapters\"><div id=\"post_chapters\"><div class=\"post_chapters-heading\">Chapters<\/div><ul><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/what-are-options\/\">What Are Options<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/components-of-an-option-contract\/\">Components Of An Option Contract<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/methods-to-value-an-option\/\">Methods To Value An Option<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/what-are-call-options\/\">What Are Call Options<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/what-are-put-options\/\">What Are Put Options<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/summarizing-the-difference-between-call-and-put-option\/\">Summarizing The Difference Between Call & Put Option<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/what-are-option-greeks\/\">What Are Option Greeks<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/different-types-of-option-trading-strategies\/\">Different Types Of Option Trading Strategies<\/a><\/li><li><i class=\"fa fa-chevron-right\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/option-trading-strategies-contd\/\">Understand Option Trading Strategies<\/a><\/li><\/ul><\/div><\/div><div class=\"chapters_toggle\" title=\"chapters\"><a title=\"chapters\" href=\"#\" id=\"open_chapters\"><span>View Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\"><\/i><\/a><a title=\"chapters\" href=\"#\" id=\"close_chapters\" style=\"display:none;\"><span>Hide Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\"><\/i><\/a><\/div>\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery('.chapters_toggle 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class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-90f6d06 market_content_tabs elementor-widget elementor-widget-eael-adv-tabs\" data-id=\"90f6d06\" data-element_type=\"widget\" data-widget_type=\"eael-adv-tabs.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t        <div data-scroll-on-click=\"no\" data-scroll-speed=\"300\" id=\"eael-advance-tabs-90f6d06\" class=\"eael-advance-tabs eael-tabs-horizontal eael-tab-auto-active \" data-tabid=\"90f6d06\">\n            <div class=\"eael-tabs-nav\">\n                <ul class=\"eael-tab-inline-icon\" role=\"tablist\">\n                                            <li id=\"study\" class=\"active-default eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"true\" data-tab=\"1\" role=\"tab\" tabindex=\"0\" aria-controls=\"study-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-edit\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Study<\/span>                            \n                                                    <\/li>\n                                            <li id=\"slides\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"2\" role=\"tab\" tabindex=\"-1\" aria-controls=\"slides-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"fas fa-book-open\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Slides<\/span>                            \n                                                    <\/li>\n                                            <li id=\"videos\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"3\" role=\"tab\" tabindex=\"-1\" aria-controls=\"videos-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-eye\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Videos<\/span>                            \n                                                    <\/li>\n                                    <\/ul>\n            <\/div>\n            \n            <div class=\"eael-tabs-content\">\n\t\t        \n                    <div id=\"study-tab\" class=\"clearfix eael-tab-content-item active-default\" data-title-link=\"study-tab\">\n\t\t\t\t        <p><div class='white' style='background:rgb(255, 255, 255); border:solid 0px rgb(255, 255, 255); border-radius:0px; padding:0px 0px 0px 1px;'>\n<div id='text_slider' class='owl-carousel sa_owl_theme owl-pagination-true' data-slider-id='text_slider' style='visibility: visible;visibility:visible;'>\n<div id='text_slider_slide01' class='sa_hover_container' data-hash='Call-and-Put-Option-Meaning' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong><span style=\"color: #f1566d\">6.1 Call And Put Option Meaning<\/span><\/strong><\/h2>\r\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-29451 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1.png\" alt=\"\" width=\"1080\" height=\"1080\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1.png 1080w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-300x300.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-1024x1024.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-150x150.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-768x768.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-100x100.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.1-96x96.png 96w\" sizes=\"(max-width: 1080px) 100vw, 1080px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<ol>\r\n<li>Call option gives the option holder(buyer) the right to buy the underlying asset at a particular price which is fixed(strike) for that particular time frame (expiration date).<\/li>\r\n<li>Put options give the right in the hands of the buyer to sell the underlying security by a particular date for the strike price, but he is not obligated to do so.<\/li>\r\n<li>A call option allows buying option, whereas Put option allows selling option.<\/li>\r\n<li>Profit is earned in a call option when the asset increases its price and when you are assuming a bullish trend. Profit is earned in the market for put options when you are assuming a bearish trend i.e. when the value of the underlying increases the call option earns profit whereas when the value of underlying decreases put option earns a profit.<\/li>\r\n<li>The potential gain in case of a call option is unlimited, but such gain is limited in the put option.<\/li>\r\n<li>In the call option, the investor looks for the rise in prices of the security. Conversely, in the put option the investor expects stock prices to go down.<\/li>\r\n<li>Buying a call option means the buyer needs to pay a premium to the seller. No margin is necessary However selling a put option requires the seller to deposit margin money with the stock exchange.<\/li>\r\n<\/ol>\r\n<p>Some similar aspects are there in the two investments like both acts as an agreement between the buyer and seller in the financial market, where time works as an essence of the contract, i.e. the option needs to be exercised before the time expires. Moreover, the losses in both the cases are limited to the amount paid on premium.<\/p>\r\n<h3>Call And Put Option How Do They Work?<\/h3>\r\n<table class=\" aligncenter\" style=\"height: 187px\" width=\"615\">\r\n<tbody>\r\n<tr>\r\n<td width=\"301\">\r\n<p>Underlying Asset\u2019s Price<\/p>\r\n<\/td>\r\n<td width=\"301\">\r\n<p>What Is To Be Done?<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"301\">\r\n<p>Probability of Increasing<\/p>\r\n<\/td>\r\n<td width=\"301\">\r\n<p>Buy Call Option Or Sell A Put Option<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"301\">\r\n<p>Probability of Decreasing<\/p>\r\n<\/td>\r\n<td width=\"301\">\r\n<p>Buy Put Option Or Sell A Call Option<\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide02' class='sa_hover_container' data-hash='Difference-Between-Call-and-Put-Option' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong><span style=\"color: #f1566d\">6.2 Difference Between Call &amp; Put Option<\/span><\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"alignnone wp-image-46078 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option.png\" alt=\"Difference Between Call &amp; Put Option\" width=\"1060\" height=\"739\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option.png 1060w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option-300x209.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option-1024x714.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option-768x535.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option-50x35.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option-100x70.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/Difference-Between-Call-Put-Option-150x105.png 150w\" sizes=\"(max-width: 1060px) 100vw, 1060px\" \/><\/p>\r\n<p style=\"text-align: center\">\u00a0<\/p>\r\n<table class=\" aligncenter\" style=\"height: 655px\" width=\"638\">\r\n<tbody>\r\n<tr>\r\n<td>\r\n<p style=\"text-align: center\"><strong>POINT OF DIFFERNECE<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p style=\"text-align: center\"><strong>CALL OPTION<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p style=\"text-align: center\"><strong>PUT OPTION<\/strong><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img decoding=\"async\" class=\"wp-image-45747  aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg\" alt=\"\" width=\"45\" height=\"45\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Savings-amico.svg 500w\" sizes=\"(max-width: 45px) 100vw, 45px\" \/><\/p>\r\n<p><strong>Buyer Of The Option<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p style=\"text-align: left\">Call option grants right to the buyer, not the obligation, to buy the underlying asset by a particular date for the strike price.<\/p>\r\n<\/td>\r\n<td>\r\n<p style=\"text-align: left\">Put option grants the right to the buyer, not the obligation, to sell the underlying asset by a particular date at the strike price.<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-45746  aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg\" alt=\"\" width=\"53\" height=\"53\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Thinking-face-amico.svg 500w\" sizes=\"(max-width: 53px) 100vw, 53px\" \/><\/p>\r\n<p><strong>Seller Of The Option<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p>Seller is obligated to sell the underlying asset to the option holder if the option is exercised<\/p>\r\n<\/td>\r\n<td>\r\n<p>Seller of put option is obligated to buy the underlying asset from the option holder if the option is exercised<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-45739 aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg\" alt=\"\" width=\"56\" height=\"56\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Money-motivation-amico.svg 500w\" sizes=\"(max-width: 56px) 100vw, 56px\" \/><\/p>\r\n<p><strong>Value<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p>The value increases as the value of the underlying asset increases<\/p>\r\n<\/td>\r\n<td>\r\n<p>The value decreases as the value of underlying asset increases<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-45736 aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg\" alt=\"\" width=\"66\" height=\"66\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Credit-assesment-amico-2.svg 500w\" sizes=\"(max-width: 66px) 100vw, 66px\" \/><\/p>\r\n<p><strong>What It Allows?<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p>Buying of stock<\/p>\r\n<\/td>\r\n<td>\r\n<p>Selling of stock<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-45707 \" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg\" alt=\"\" width=\"58\" height=\"58\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bitcoin-P2P-amico.svg 500w\" sizes=\"(max-width: 58px) 100vw, 58px\" \/><\/p>\r\n<p><strong>Relationship With Stock Market<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p>Direct<\/p>\r\n<\/td>\r\n<td>\r\n<p>Inverse<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-45708  aligncenter\" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg\" alt=\"\" width=\"44\" height=\"44\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Business-vision-amico.svg 500w\" sizes=\"(max-width: 44px) 100vw, 44px\" \/><\/p>\r\n<p><strong>Potential Gain<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p>Unlimited<\/p>\r\n<\/td>\r\n<td>\r\n<p>Unlimited<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-45703 \" role=\"img\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg\" alt=\"\" width=\"43\" height=\"43\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 1536w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 2048w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/12\/Bankruptcy-rafiki.svg 500w\" sizes=\"(max-width: 43px) 100vw, 43px\" \/><\/p>\r\n<p><strong>Investor Looks For<\/strong><\/p>\r\n<\/td>\r\n<td>\r\n<p>Price Rise<\/p>\r\n<\/td>\r\n<td>\r\n<p>Fall in prices<\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p style=\"text-align: center\">\u00a0<\/p><\/div>\n<div id='text_slider_slide03' class='sa_hover_container' data-hash='Risk-&#038;-Rewards-Related-to-Options' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong><span style=\"color: #f1566d\">6.3 Risk &amp; Rewards Related to Call And Put Options<\/span><\/strong><\/h2>\r\n<p style=\"text-align: center\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-29453 aligncenter\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-300x300.png\" alt=\"\" width=\"300\" height=\"300\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-300x300.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-1024x1024.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-150x150.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-768x768.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-100x100.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3-96x96.png 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.3.png 1080w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/p>\r\n<p>We have tabulated a simple list of how the risks and rewards will work out if you are trading in call and put options: &#8211;<\/p>\r\n<table class=\" aligncenter\" style=\"height: 437px\" width=\"589\">\r\n<tbody>\r\n<tr>\r\n<td width=\"120\">\r\n<p>Parameters<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Call Option Buyer<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Call Option Seller<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Put Option Buyer<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Put Option Seller<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"120\">\r\n<p>Maximum Gain<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Unlimited<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Premium Amount Received<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Strike Price \u2013 Premium Paid<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Premium Amount Received<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"120\">\r\n<p>Maximum Profit<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Premium Paid<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Unlimited<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Premium Paid<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Strike Price \u2013 Premium<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"120\">\r\n<p>Zero Profit \u2013 Zero Loss<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Strike Price + Premium Paid<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Strike Price + Premium Paid<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Strike Price + Premium Paid<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Strike Price + Premium Paid<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"120\">\r\n<p>Ideal Action<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Exercise<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Expire<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Exercise<\/p>\r\n<\/td>\r\n<td width=\"120\">\r\n<p>Expire<\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>Now Let us deep dive into how the payoffs for each of these parameters will work: &#8211;<\/p>\r\n<h3>Situation 1: &#8211; If You Are a Buyer of Call Option<\/h3>\r\n<h3>What Happens to Call Options on Expiry?<\/h3>\r\n<p>In call and put options, when you buy a call option, these are the three things that can happen during expiry:<\/p>\r\n<ul>\r\n<li>Market Price &gt; Strike Price = In The Money Call Option = Gains<\/li>\r\n<li>Market Price &lt; Strike Price = Out of The Money Call Option = Losses<\/li>\r\n<li>Market Price = Strike Price = At The Money Call Option = Break Even<\/li>\r\n<\/ul>\r\n<h3>Situation 2: &#8211; If You Are A Seller of a Call Option<\/h3>\r\n<h3>What Happens to Call Options on Expiry?<\/h3>\r\n<p>When you sell a call option these are the three likely scenarios that can occur when selling a call option: &#8211;<\/p>\r\n<ul>\r\n<li>Market Price &gt; Strike Price = In The Money Call Option = Loss<\/li>\r\n<li>Market Price &lt; Strike Price = Out of The Money Call Option = Gains<\/li>\r\n<li>Market Price = Strike Price = At The Money Call Option = Profit In the Form Of Premium<\/li>\r\n<\/ul>\r\n<p>If you wish to know more about call option payoffs and how to the work you can read about <a href=\"https:\/\/www.5paisa.com\/finschool\/course\/equity-derivatives-advance-module\/what-are-call-options\/\">call option basics.<\/a><\/p>\r\n<h3>Situation 3: &#8211; If You Are a Buyer of Put Option<\/h3>\r\n<h3>What Happens to Call Options on Expiry?<\/h3>\r\n<ul>\r\n<li>Market Price &gt; Strike Price = Out Of The Money Put Option = Loss<\/li>\r\n<li>Market Price &lt; Strike Price = In The Money Put Option = Gains<\/li>\r\n<li>Market Price = Strike Price = At The Money Put Option = Loss In The Form of premium paid<\/li>\r\n<\/ul>\r\n<h3>Situation 4: &#8211; If You Are a Seller of Put Option<\/h3>\r\n<ul>\r\n<li>Market Price &gt; Strike Price = Out Of The Money Put Option = Gains<\/li>\r\n<li>Market Price &lt; Strike Price = In The Money Put Option = Losses<\/li>\r\n<li>Market Price = Strike Price = At The Money Put Option = Profit In The Form of Premium<\/li>\r\n<\/ul>\r\n<p>If you wish to know more about call option payoffs and how to the work you can read about <a href=\"https:\/\/www.5paisa.com\/finschool\/course\/equity-derivatives-advance-module\/what-are-put-options\/\">put option basics.<\/a><\/p>\r\n<h3>\u00a0<\/h3><\/div>\n<div id='text_slider_slide04' class='sa_hover_container' data-hash='Example-to-explain-the-difference-between-call-option-and-put-option ' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; '><h2 style=\"text-align: left\"><strong><span style=\"color: #f1566d\">6.4 Example to explain the difference between call option and put option<\/span><\/strong><\/h2>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-29454 aligncenter\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-300x300.png\" alt=\"\" width=\"300\" height=\"300\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-300x300.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-1024x1024.png 1024w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-150x150.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-768x768.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-100x100.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4-96x96.png 96w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/04\/6.4.png 1080w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>Let us say Naman purchased a put option for selling 20 shares of a company at Rs. 5,000 each after two months. Ritesh has entered the contract with a call option of buying the shares at the same price, volume, and time frame.<\/p>\r\n<p>However, if the price increases to Rs.7,000, Naman would make a loss. However, he would still have to sell the shares for much less than their market worth. This is when purchasing a call option helps. If the price of a share appreciates, your investment works.<\/p>\r\n<p>Now, let us look at how it works if the price of the share falls to Rs.4,500. Now, purchasing the share at INR 5,000 would make it a bad trade for Ritesh. So, being a call buyer, he can choose to walk out. He doesn&#8217;t have to buy the stocks underlying the contract. When he walks out, he is not charged a penalty, but his loss is the premium he paid.<\/p>\r\n<p>If he chooses to buy the shares nonetheless, it&#8217;s a profit for the put option buyer. He can sell the shares at a higher price and use the difference for his next investment, profits, liquidity, etc.<\/p>\r\n<p>For your call option to be profitable, the shares you purchased the contract for have to appreciate in the given time frame, so that you can trade them in the market openly and make profits.<\/p>\r\n<p>For your put option to have gains, the shares you have to sell must depreciate in price, so that if the buyer goes through with his trade, you have to sell the shares at higher prices than what is currently prevailing in the market. You can then use the remainder to buy the shares back for a lesser sum.<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<\/div>\n<\/div>\n<script type='text\/javascript'>\n\tjQuery(document).ready(function() {\n\t\tjQuery('#text_slider').owlCarousel({\n\t\t\titems : 1,\n\t\t\tsmartSpeed : 400,\n\t\t\tautoplay : false,\n\t\t\tautoplayHoverPause : false,\n\t\t\tsmartSpeed : 400,\n\t\t\tfluidSpeed : 400,\n\t\t\tautoplaySpeed : 400,\n\t\t\tnavSpeed : 400,\n\t\t\tdotsSpeed : 400,\n\t\t\tdotsEach : 1,\n\t\t\tloop : false,\n\t\t\tnav : true,\n\t\t\tnavText : ['Previous','Next'],\n\t\t\tdots : true,\n\t\t\tresponsiveRefreshRate : 200,\n\t\t\tslideBy : 1,\n\t\t\tmergeFit : true,\n\t\t\tautoHeight : true,\n\t\t\tmouseDrag : false,\n\t\t\ttouchDrag : true\n\t\t});\n\t\tjQuery('#text_slider').css('visibility', 'visible');\n\t\tvar owl_goto = jQuery('#text_slider');\n\t\tjQuery('.text_slider_goto1').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 0);\n\t\t});\n\t\tjQuery('.text_slider_goto2').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 1);\n\t\t});\n\t\tjQuery('.text_slider_goto3').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 2);\n\t\t});\n\t\tjQuery('.text_slider_goto4').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 3);\n\t\t});\n\t\tvar resize_22269 = jQuery('.owl-carousel');\n\t\tresize_22269.on('initialized.owl.carousel', function(e) {\n\t\t\tif (typeof(Event) === 'function') {\n\t\t\t\twindow.dispatchEvent(new Event('resize'));\n\t\t\t} else {\n\t\t\t\tvar evt = window.document.createEvent('UIEvents');\n\t\t\t\tevt.initUIEvent('resize', true, false, window, 0);\n\t\t\t\twindow.dispatchEvent(evt);\n\t\t\t}\n\t\t});\n\t});\n<\/script>\n<\/p>                    <\/div>\n\t\t        \n                    <div id=\"slides-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"slides-tab\">\n\t\t\t\t        <p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-11528 size-full\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" alt=\"\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png 612w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview-300x200.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/p>                    <\/div>\n\t\t        \n                    <div id=\"videos-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"videos-tab\">\n\t\t\t\t        <p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-11528 size-full\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" alt=\"\" width=\"612\" height=\"408\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png 612w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview-300x200.png 300w\" sizes=\"(max-width: 612px) 100vw, 612px\" \/><\/p>                    <\/div>\n\t\t                    <\/div>\n        <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Study Slides Videos 6.1 Difference Between Call &amp; Put Option Call option gives the option holder(buyer) the right to buy the underlying asset at a particular price which is fixed(strike) for that particular time frame (expiration date). Put options give the right in the hands of the buyer to sell the underlying security by a &#8230; <a title=\"Call and Put Option: Meaning, Difference, Risk &#038; Rewards Related To Options\" class=\"read-more\" href=\"https:\/\/www.5paisa.com\/finschool\/course\/option-trading-course\/summarizing-the-difference-between-call-and-put-option\/\" aria-label=\"Read more about Call and Put Option: Meaning, Difference, Risk &#038; Rewards Related To Options\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":22346,"menu_order":6,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"class_list":["post-22393","markets","type-markets","status-publish","format-standard","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/22393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets"}],"about":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/types\/markets"}],"author":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/comments?post=22393"}],"version-history":[{"count":13,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/22393\/revisions"}],"predecessor-version":[{"id":75240,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/22393\/revisions\/75240"}],"up":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/22346"}],"wp:attachment":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media?parent=22393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/categories?post=22393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}