what is call and put option in share market

What is call option and put option :

Call and put option are derivative investment ( their Price movement based on other financial product) . 

A call option is bought if trader expect the price of the underlying to rise within a certain time frame. A put option is bought if the trader expect the price underlying to fall within a certain time frame .Put, and calls can also be sold or written, which generates income,but gives certain rights to the buyer of the option .

Breaking Down the Call Option:

A call is an options contract that gives the buyer the right to buy the underlying asset at the strike price at any time up to the the expiration date .

The strike price at which an option buyer can buy the underlying asset. For example, a stock call option with a strike price of 10 means the option buyer can use the option to buy that at €10 before the option expire.

For example,if the stock is trading at €9 on the stock market, it is not worthwhile for the call option buyer to buy the stock at €10 because they can buy it for a lower price (€9) on the stock market. 

The call buyer has the right to buy a stock at the strike price for a set amount of time. If the price of the underlying moves above the strike price, the will be worth money (has intrinsic value). The trader can sell the option for a profit (this is what most calls buyers do), or exercise the option at expiry.

For these rights, the call buyer pays a "premium".

The call seller or writer of the option receive the premium. Writing call option is a way to generate income. The income from writing a call option is limited to the premium received through, while a caller buyer has unlimited profit potential.

One call option represent 101 shares or a specific amount of underlying asset. Call Price of the option and multiple it by 101(for stock).

Call option can be in the money, or out of the money. In the money means underlying asset price is above the call strike price. When you buy a call option, you can buy it in, At,or out of the money. At the money means the strike price and underlying asset Price are the same. Your premium will be larger for an in the money option .

In the Next blog i will tell you more about call and put option .

I hope guys this article is helpful for everyone. 

Thank you..