News
February 2020

What is the Difference Between a Call and a Put?

Call and put options can be used for similar purposes, including potential income generation and managing risk. However, they also have very important differences. An equity or ETF call option enables its buyer to purchase the security underlying the option at its strike price, any time prior to expiration. An equity or ETF put option enables its buyer to sell the security underlying the option at its strike price, up to and including expiration. 

Generally speaking, a person who buys a call option is thought to be bullish on the underlying, meaning that they're expecting an increase in the share price, whereas a put buyer is viewed as expressing a bearish view, or an expectation of a decline in the underlying. That said, calls and puts are often combined with other options in multi-option trades, such as spreads, and have many motivations, depending on the investor.

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