{"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\u0026#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 \u0026#038; Rewards Related To Options"},"content":{"rendered":"\u003cdiv data-elementor-type=\u0022wp-post\u0022 data-elementor-id=\u002222393\u0022 class=\u0022elementor elementor-22393\u0022\u003e\u003csection class=\u0022elementor-section elementor-top-section elementor-element elementor-element-23ba90b elementor-section-full_width tab_container elementor-section-height-default elementor-section-height-default\u0022 data-id=\u002223ba90b\u0022 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data-title-link=\u0022study-tab\u0022\u003e\u003cp\u003e\u003cdiv class=\u0027white\u0027 style=\u0027background:rgb(255, 255, 255); border:solid 0px rgb(255, 255, 255); border-radius:0px; padding:0px 0px 0px 1px;\u0027\u003e\u003cdiv id=\u0027text_slider\u0027 class=\u0027owl-carousel sa_owl_theme owl-pagination-true\u0027 data-slider-id=\u0027text_slider\u0027 style=\u0027visibility: visible;visibility:visible;\u0027\u003e\u003cdiv id=\u0027text_slider_slide01\u0027 class=\u0027sa_hover_container\u0027 data-hash=\u0027Call-and-Put-Option-Meaning\u0027 style=\u0027padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; \u0027\u003e\u003ch2 style=\u0022text-align: left\u0022\u003e\u003cstrong\u003e\u003cspan style=\u0022color: #f1566d\u0022\u003e6.1 Call And Put Option Meaning\u003c/span\u003e\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003cimg fetchpriority=\u0022high\u0022 decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-29451 size-full\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/04/6.1.png\u0022 alt=\u0022\u0022 width=\u00221080\u0022 height=\u00221080\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 1080px) 100vw, 1080px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u0026nbsp;\u003c/p\u003e\u003cp\u003e\u0026nbsp;\u003c/p\u003e\u003col\u003e\u003cli\u003eCall 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).\u003c/li\u003e\u003cli\u003ePut 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.\u003c/li\u003e\u003cli\u003eA call option allows buying option, whereas Put option allows selling option.\u003c/li\u003e\u003cli\u003eProfit 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.\u003c/li\u003e\u003cli\u003eThe potential gain in case of a call option is unlimited, but such gain is limited in the put option.\u003c/li\u003e\u003cli\u003eIn 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.\u003c/li\u003e\u003cli\u003eBuying 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.\u003c/li\u003e\u003c/ol\u003e\u003cp\u003eSome 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. 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srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 1060px) 100vw, 1060px\u0022 /\u003e\u003c/p\u003e\u003cp style=\u0022text-align: center\u0022\u003e\u003c/p\u003e\u003ctable class=\u0022 aligncenter\u0022 style=\u0022height: 655px\u0022 width=\u0022638\u0022\u003e\u003ctbody\u003e\u003ctr\u003e\u003ctd\u003e\u003cp style=\u0022text-align: center\u0022\u003e\u003cstrong\u003ePOINT OF DIFFERNECE\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp style=\u0022text-align: center\u0022\u003e\u003cstrong\u003eCALL OPTION\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp style=\u0022text-align: center\u0022\u003e\u003cstrong\u003ePUT OPTION\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg decoding=\u0022async\u0022 class=\u0022wp-image-45747  aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Savings-amico.svg\u0022 alt=\u0022\u0022 width=\u002245\u0022 height=\u002245\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 45px) 100vw, 45px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eBuyer Of The Option\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp style=\u0022text-align: left\u0022\u003eCall option grants right to the buyer, not the obligation, to buy the underlying asset by a particular date for the strike price.\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp style=\u0022text-align: left\u0022\u003ePut option grants the right to the buyer, not the obligation, to sell the underlying asset by a particular date at the strike price.\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022wp-image-45746  aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Thinking-face-amico.svg\u0022 alt=\u0022\u0022 width=\u002253\u0022 height=\u002253\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 53px) 100vw, 53px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eSeller Of The Option\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eSeller is obligated to sell the underlying asset to the option holder if the option is exercised\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eSeller of put option is obligated to buy the underlying asset from the option holder if the option is exercised\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022wp-image-45739 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Money-motivation-amico.svg\u0022 alt=\u0022\u0022 width=\u002256\u0022 height=\u002256\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 56px) 100vw, 56px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eValue\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eThe value increases as the value of the underlying asset increases\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eThe value decreases as the value of underlying asset increases\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022 wp-image-45736 aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Credit-assesment-amico-2.svg\u0022 alt=\u0022\u0022 width=\u002266\u0022 height=\u002266\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 66px) 100vw, 66px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eWhat It Allows?\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eBuying of stock\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eSelling of stock\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-45707 \u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Bitcoin-P2P-amico.svg\u0022 alt=\u0022\u0022 width=\u002258\u0022 height=\u002258\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 58px) 100vw, 58px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eRelationship With Stock Market\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eDirect\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eInverse\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022wp-image-45708  aligncenter\u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Business-vision-amico.svg\u0022 alt=\u0022\u0022 width=\u002244\u0022 height=\u002244\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 44px) 100vw, 44px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003ePotential Gain\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eUnlimited\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eUnlimited\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-45703 \u0022 role=\u0022img\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/12/Bankruptcy-rafiki.svg\u0022 alt=\u0022\u0022 width=\u002243\u0022 height=\u002243\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 43px) 100vw, 43px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u003cstrong\u003eInvestor Looks For\u003c/strong\u003e\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003ePrice Rise\u003c/p\u003e\u003c/td\u003e\u003ctd\u003e\u003cp\u003eFall in prices\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003c/tbody\u003e\u003c/table\u003e\u003cp style=\u0022text-align: center\u0022\u003e\u003c/p\u003e\u003c/div\u003e\u003cdiv id=\u0027text_slider_slide03\u0027 class=\u0027sa_hover_container\u0027 data-hash=\u0027Risk-\u0026#038;-Rewards-Related-to-Options\u0027 style=\u0027padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; \u0027\u003e\u003ch2 style=\u0022text-align: left\u0022\u003e\u003cstrong\u003e\u003cspan style=\u0022color: #f1566d\u0022\u003e6.3 Risk \u0026amp; Rewards Related to Call And Put Options\u003c/span\u003e\u003c/strong\u003e\u003c/h2\u003e\u003cp style=\u0022text-align: center\u0022\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022alignnone size-medium wp-image-29453 aligncenter\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/04/6.3-300x300.png\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/p\u003e\u003cp\u003eWe have tabulated a simple list of how the risks and rewards will work out if you are trading in call and put options: \u0026#8211;\u003c/p\u003e\u003ctable class=\u0022 aligncenter\u0022 style=\u0022height: 437px\u0022 width=\u0022589\u0022\u003e\u003ctbody\u003e\u003ctr\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eParameters\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eCall Option Buyer\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eCall Option Seller\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003ePut Option Buyer\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003ePut Option Seller\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eMaximum Gain\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eUnlimited\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003ePremium Amount Received\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eStrike Price – Premium Paid\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003ePremium Amount Received\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eMaximum Profit\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003ePremium Paid\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eUnlimited\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003ePremium Paid\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eStrike Price – Premium\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eZero Profit – Zero Loss\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eStrike Price + Premium Paid\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eStrike Price + Premium Paid\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eStrike Price + Premium Paid\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eStrike Price + Premium Paid\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003ctr\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eIdeal Action\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eExercise\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eExpire\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eExercise\u003c/p\u003e\u003c/td\u003e\u003ctd width=\u0022120\u0022\u003e\u003cp\u003eExpire\u003c/p\u003e\u003c/td\u003e\u003c/tr\u003e\u003c/tbody\u003e\u003c/table\u003e\u003cp\u003e\u0026nbsp;\u003c/p\u003e\u003cp\u003e\u0026nbsp;\u003c/p\u003e\u003cp\u003eNow Let us deep dive into how the payoffs for each of these parameters will work: \u0026#8211;\u003c/p\u003e\u003ch3\u003eSituation 1: \u0026#8211; If You Are a Buyer of Call Option\u003c/h3\u003e\u003ch3\u003eWhat Happens to Call Options on Expiry?\u003c/h3\u003e\u003cp\u003eIn call and put options, when you buy a call option, these are the three things that can happen during expiry:\u003c/p\u003e\u003cul\u003e\u003cli\u003eMarket Price \u0026gt; Strike Price = In The Money Call Option = Gains\u003c/li\u003e\u003cli\u003eMarket Price \u0026lt; Strike Price = Out of The Money Call Option = Losses\u003c/li\u003e\u003cli\u003eMarket Price = Strike Price = At The Money Call Option = Break Even\u003c/li\u003e\u003c/ul\u003e\u003ch3\u003eSituation 2: \u0026#8211; If You Are A Seller of a Call Option\u003c/h3\u003e\u003ch3\u003eWhat Happens to Call Options on Expiry?\u003c/h3\u003e\u003cp\u003eWhen you sell a call option these are the three likely scenarios that can occur when selling a call option: \u0026#8211;\u003c/p\u003e\u003cul\u003e\u003cli\u003eMarket Price \u0026gt; Strike Price = In The Money Call Option = Loss\u003c/li\u003e\u003cli\u003eMarket Price \u0026lt; Strike Price = Out of The Money Call Option = Gains\u003c/li\u003e\u003cli\u003eMarket Price = Strike Price = At The Money Call Option = Profit In the Form Of Premium\u003c/li\u003e\u003c/ul\u003e\u003cp\u003eIf you wish to know more about call option payoffs and how to the work you can read about \u003ca href=\u0022https://www.5paisa.com/hindi/finschool/course/equity-derivatives-advance-module/what-are-call-options/\u0022\u003ecall option basics.\u003c/a\u003e\u003c/p\u003e\u003ch3\u003eSituation 3: \u0026#8211; If You Are a Buyer of Put Option\u003c/h3\u003e\u003ch3\u003eWhat Happens to Call Options on Expiry?\u003c/h3\u003e\u003cul\u003e\u003cli\u003eMarket Price \u0026gt; Strike Price = Out Of The Money Put Option = Loss\u003c/li\u003e\u003cli\u003eMarket Price \u0026lt; Strike Price = In The Money Put Option = Gains\u003c/li\u003e\u003cli\u003eMarket Price = Strike Price = At The Money Put Option = Loss In The Form of premium paid\u003c/li\u003e\u003c/ul\u003e\u003ch3\u003eSituation 4: \u0026#8211; If You Are a Seller of Put Option\u003c/h3\u003e\u003cul\u003e\u003cli\u003eMarket Price \u0026gt; Strike Price = Out Of The Money Put Option = Gains\u003c/li\u003e\u003cli\u003eMarket Price \u0026lt; Strike Price = In The Money Put Option = Losses\u003c/li\u003e\u003cli\u003eMarket Price = Strike Price = At The Money Put Option = Profit In The Form of Premium\u003c/li\u003e\u003c/ul\u003e\u003cp\u003eIf you wish to know more about call option payoffs and how to the work you can read about \u003ca href=\u0022https://www.5paisa.com/hindi/finschool/course/equity-derivatives-advance-module/what-are-put-options/\u0022\u003eput option basics.\u003c/a\u003e\u003c/p\u003e\u003ch3\u003e\u003c/h3\u003e\u003c/div\u003e\u003cdiv id=\u0027text_slider_slide04\u0027 class=\u0027sa_hover_container\u0027 data-hash=\u0027Example-to-explain-the-difference-between-call-option-and-put-option \u0027 style=\u0027padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:400px; \u0027\u003e\u003ch2 style=\u0022text-align: left\u0022\u003e\u003cstrong\u003e\u003cspan style=\u0022color: #f1566d\u0022\u003e6.4 Example to explain the difference between call option and put option\u003c/span\u003e\u003c/strong\u003e\u003c/h2\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022alignnone size-medium wp-image-29454 aligncenter\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2022/04/6.4-300x300.png\u0022 alt=\u0022\u0022 width=\u0022300\u0022 height=\u0022300\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 300px) 100vw, 300px\u0022 /\u003e\u003c/p\u003e\u003cp\u003e\u0026nbsp;\u003c/p\u003e\u003cp\u003eLet 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.\u003c/p\u003e\u003cp\u003eHowever, 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.\u003c/p\u003e\u003cp\u003eNow, 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\u0026#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.\u003c/p\u003e\u003cp\u003eIf he chooses to buy the shares nonetheless, it\u0026#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.\u003c/p\u003e\u003cp\u003eFor 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.\u003c/p\u003e\u003cp\u003eFor 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.\u003c/p\u003e\u003cp\u003e\u0026nbsp;\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003cscript type=\u0027text/javascript\u0027\u003ejQuery(document).ready(function()  {jQuery(\u0027#text_slider\u0027).owlCarousel({items  :  1,smartSpeed  :  400,autoplay  :  false,autoplayHoverPause  :  false,smartSpeed  :  400,fluidSpeed  :  400,autoplaySpeed  :  400,navSpeed  :  400,dotsSpeed  :  400,dotsEach  :  1,loop  :  false,nav  :  true,navText  :  [\u0027Previous\u0027,\u0027Next\u0027],dots  :  true,responsiveRefreshRate  :  200,slideBy  :  1,mergeFit  :  true,autoHeight  :  true,mouseDrag  :  false,touchDrag  :  true});jQuery(\u0027#text_slider\u0027).css(\u0027visibility\u0027, \u0027visible\u0027);var  owl_goto  =  jQuery(\u0027#text_slider\u0027);jQuery(\u0027.text_slider_goto1\u0027).click(function(event){owl_goto.trigger(\u0027to.owl.carousel\u0027,  0);});jQuery(\u0027.text_slider_goto2\u0027).click(function(event){owl_goto.trigger(\u0027to.owl.carousel\u0027,  1);});jQuery(\u0027.text_slider_goto3\u0027).click(function(event){owl_goto.trigger(\u0027to.owl.carousel\u0027,  2);});jQuery(\u0027.text_slider_goto4\u0027).click(function(event){owl_goto.trigger(\u0027to.owl.carousel\u0027,  3);});var  resize_22269  =  jQuery(\u0027.owl-carousel\u0027);resize_22269.on(\u0027initialized.owl.carousel\u0027,  function(e)  {if  (typeof(Event)  === \u0027function\u0027)  {window.dispatchEvent(new  Event(\u0027resize\u0027));}  else  {var  evt  =  window.document.createEvent(\u0027UIEvents\u0027);evt.initUIEvent(\u0027resize\u0027,  true,  false,  window,  0);window.dispatchEvent(evt);}});});\u003c/script\u003e\u003c/p\u003e\u003c/div\u003e\u003cdiv id=\u0022slides-tab\u0022 class=\u0022clearfix eael-tab-content-item \u0022 data-title-link=\u0022slides-tab\u0022\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-11528 size-full\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2021/10/coming-soon-person-g8026473a8_1920-removebg-preview.png\u0022 alt=\u0022\u0022 width=\u0022612\u0022 height=\u0022408\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 612px) 100vw, 612px\u0022 /\u003e\u003c/p\u003e\u003c/div\u003e\u003cdiv id=\u0022videos-tab\u0022 class=\u0022clearfix eael-tab-content-item \u0022 data-title-link=\u0022videos-tab\u0022\u003e\u003cp\u003e\u003cimg loading=\u0022lazy\u0022 decoding=\u0022async\u0022 class=\u0022aligncenter wp-image-11528 size-full\u0022 src=\u0022https://www.5paisa.com/hindi/finschool/wp-content/uploads/2021/10/coming-soon-person-g8026473a8_1920-removebg-preview.png\u0022 alt=\u0022\u0022 width=\u0022612\u0022 height=\u0022408\u0022 srcset=\u0022https://www.5paisa.com/hindi/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\u0022 sizes=\u0022(max-width: 612px) 100vw, 612px\u0022 /\u003e\u003c/p\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003c/div\u003e\u003c/div\u003e\u003c/div\u003e\u003c/section\u003e\u003c/div\u003e","protected":false},"excerpt":{"rendered":"\u003cp\u003eStudy Slides Videos 6.1 Difference Between Call \u0026 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 … \u003ca title=\u0022Call and Put Option: Meaning, Difference, Risk \u0026#038; Rewards Related To Options\u0022 class=\u0022read-more\u0022 href=\u0022https://www.5paisa.com/hindi/finschool/course/option-trading-course/summarizing-the-difference-between-call-and-put-option/\u0022 aria-label=\u0022Read more about Call and Put Option: Meaning, Difference, Risk \u0026#038; Rewards Related To Options\u0022\u003eRead more\u003c/a\u003e\u003c/p\u003e","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}]}}