{"id":18770,"date":"2025-06-10T05:39:36","date_gmt":"2025-06-10T05:39:36","guid":{"rendered":"https:\/\/wp-api.pocketful.in\/blog\/?post_type=trading&#038;p=18770"},"modified":"2025-06-16T09:58:20","modified_gmt":"2025-06-16T09:58:20","slug":"call-and-put-options-meaning","status":"publish","type":"trading","link":"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/","title":{"rendered":"Call and Put Options: Meaning, Types, Difference &amp; Examples"},"content":{"rendered":"\n<p>Option trading begins with two important terms, Call and Put. These terms may seem technical at first, but these instruments are crucial in designing trading strategies to take advantage of different market situations.&nbsp;<\/p>\n\n\n\n<p>In this blog, we will analyze both these options in detail along with their meaning, differences and examples.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#What_is_Call_Option\" title=\"What is Call Option?\">What is Call Option?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#What_is_a_Put_Option\" title=\"What is a Put Option?\">What is a Put Option?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#Key_Terms_to_Know_About_Call_and_Put_Options\" title=\"Key Terms to Know About Call and Put Options\">Key Terms to Know About Call and Put Options<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#Call_and_Put_Options_with_Examples\" title=\"Call and Put Options with Examples\">Call and Put Options with Examples<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#ITM_ATM_and_OTM_Call_and_Put_Options\" title=\"ITM, ATM and OTM Call and Put Options\">ITM, ATM and OTM Call and Put Options<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#American_vs_European_Options\" title=\"American vs European Options\">American vs European Options<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#Key_Differences_Between_Call_and_Put_Options\" title=\"Key Differences Between Call and Put Options\">Key Differences Between Call and Put Options<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#Advantages_Risks_of_Options_Trading\" title=\"Advantages &amp; Risks of Options Trading\">Advantages &amp; Risks of Options Trading<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#Pro_Tips_for_Beginners_in_Options_Trading\" title=\"Pro Tips for Beginners in Options Trading\">Pro Tips for Beginners in Options Trading<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/wp-api.pocketful.in\/blog\/trading\/call-and-put-options-meaning\/#FAQs\" title=\"FAQs\">FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"h-what-is-call-option\"><span class=\"ez-toc-section\" id=\"What_is_Call_Option\"><\/span>What is Call Option?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A call option is a contract that gives a holder the right to buy an underlying asset in the future at a predetermined price (called the strike price). It is important to note here that this is a &#8220;right&#8221;, not an &#8220;obligation&#8221; &#8211; that is, you can buy it if you want, and you can leave it if you don&#8217;t want it.<\/p>\n\n\n\n<p>Suppose the price of a stock is \u20b9100 right now, and it is expected that it will rise to \u20b9120 until option contract expiry. In such a situation, buying a call option with a strike price of \u20b9100 gives the buyer the right to buy the stock for \u20b9 100 &#8211; even if its market price increases to \u20b9120.<\/p>\n\n\n\n<p>Traders usually buy a call option when they expect that the price of a stock will increase in the future. This creates the possibility of more profit with less investment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-a-put-option\"><span class=\"ez-toc-section\" id=\"What_is_a_Put_Option\"><\/span>What is a Put Option?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Put Option is a contract that gives the holder the right to sell an underlying asset in the future at a fixed price (called strike price). It means the holder can choose to exercise the option if it is profitable or let it expire worthless.<\/p>\n\n\n\n<p>Suppose the price of a stock is currently \u20b9150, but it is estimated that it may fall to \u20b9120 in until the option contract expiry. In such a situation, buying a put option with a strike price of \u20b9150 gives the investor the right to sell that stock for \u20b9150, no matter how much the market price goes down.<\/p>\n\n\n\n<p>Put options are especially useful when the market is moving towards recession or there is a fear of a stock price decline. By buying puts, the investor can protect his portfolio or make profit from falling prices.<\/p>\n\n\n\n<p>In simple words, a put option is a means of both portfolio protection and potentially profit from falling prices.<\/p>\n\n\n\n<p><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/put-call-ratio\/\">What is Put-Call Ratio?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-key-terms-to-know-about-call-and-put-options\"><span class=\"ez-toc-section\" id=\"Key_Terms_to_Know_About_Call_and_Put_Options\"><\/span>Key Terms to Know About Call and Put Options<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To be successful in <a href=\"https:\/\/www.pocketful.in\/blog\/trading\/options\/\">option trading<\/a>, it is important to understand certain terms. These terms strengthen the basic understanding of trading :<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Strike Price :<\/strong> The price at which the option holder gets the right to buy or sell shares.<\/li>\n\n\n\n<li><strong>Premium:<\/strong> The amount paid to buy the option, which is the maximum amount of loss that can be incurred.<\/li>\n\n\n\n<li><strong>Expiry Date:<\/strong> The date on which the option expires.<\/li>\n\n\n\n<li><strong>Intrinsic Value:<\/strong> The difference between strike price and the underlying asset\u2019s price at expiry.<\/li>\n\n\n\n<li><strong>Time Decay or Theta:<\/strong> The decrease in the value of the option due to time.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-call-and-put-options-with-examples\"><span class=\"ez-toc-section\" id=\"Call_and_Put_Options_with_Examples\"><\/span>Call and Put Options with Examples<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Call Option Example: When the market is expected to rise<\/strong><\/p>\n\n\n\n<p><strong>Scenario : <\/strong>Nifty is currently <a href=\"https:\/\/www.pocketful.in\/blog\/trading\/\">trading <\/a>at 24,700 and it is expected that it may move higher in a few days.<\/p>\n\n\n\n<p><strong>Trade : <\/strong>Call Option with strike price of 24,900 bought at a premium of 100 points.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-case-1-profit-on-expiry\">Case 1 \u2013 Profit on Expiry <\/h3>\n\n\n\n<p>If Nifty reaches 25,200 by expiry, then the option is termed as ITM and it would be profitable to exercise it:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Intrinsic Value =&nbsp; 25,200 &#8211; 24,900 = 300 points<\/li>\n\n\n\n<li>Net Profit = \u20b9300 &#8211; \u20b9100 (premium) = 200 points per lot<\/li>\n\n\n\n<li>One point = \u20b975 ; therefore, Net Profit = 200 * 75 = \u20b915,000<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-case-2-nbsp-loss-on-expiry\">Case 2&nbsp; \u2013 Loss on Expiry<\/h3>\n\n\n\n<p>If Nifty declines or remains flat, the option will expire worthless.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Loss = 100 points (Premium)<\/li>\n\n\n\n<li>Net Loss = 100 * 75 = \u20b97,500<\/li>\n<\/ul>\n\n\n\n<p><strong>Put Option Example: When the market is expected to fall<\/strong><\/p>\n\n\n\n<p><strong>Scenario: <\/strong>Nifty is currently at 24,700, but it seems like it will fall.<\/p>\n\n\n\n<p><strong>Trade : <\/strong>Put Option with strike price of 24,500 bought at a premium of 90 points.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-case-1-profit-on-expiry-0\">Case 1 \u2013 Profit on Expiry<\/h3>\n\n\n\n<p>If Nifty falls to 24,100&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Intrinsic Value = 24,500 \u2013 24,100 = 400 points per lot<\/li>\n\n\n\n<li>Net Profit = 400 \u2013 90 = 310 per lot<\/li>\n\n\n\n<li>One point = \u20b975 ; therefore, Net Profit = 310 * 75 = \u20b923,250<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-case-2-loss-on-expiry\">Case 2 \u2013 Loss on Expiry<\/h3>\n\n\n\n<p>If Nifty moves higher or remains flat, the option expires worthless.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Loss = 90 points (premium)<\/li>\n\n\n\n<li>Net Loss = 90 * 75 = \u20b96,750<\/li>\n<\/ul>\n\n\n\n<p>In Call and Put Options, the maximum loss is predetermined (limited to the premium), but if the market moves in the right direction, the returns can be manifold. This is also the biggest feature of option trading.<\/p>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/trading\/options\/implied-volatility\/\">What is Implied Volatility in Options Trading<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-itm-atm-and-otm-call-and-put-options\"><span class=\"ez-toc-section\" id=\"ITM_ATM_and_OTM_Call_and_Put_Options\"><\/span>ITM, ATM and OTM Call and Put Options<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In option trading, just buying a call or a put is not enough. It is also important to understand the status of the option at that time &#8211; In-the-Money (ITM), At-the-Money (ATM) or Out-of-the-Money (OTM), as explained below:<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-1-in-the-money-itm\">1. In-the-Money (ITM)<\/h3>\n\n\n\n<p>A Call Option is ITM when the stock price is above the strike price. A Put Option is ITM when the price goes below the strike price.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>In Call Option : <\/strong>If the strike price is 24,500 and Nifty is currently trading at \u20b924,700 Then the Call Option is ITM as it will give a profit if exercised immediately.<\/li>\n\n\n\n<li><strong>In Put Option : <\/strong>If the strike price is \u20b924,900 and Nifty is trading at 24,500 , then the Put Option is ITM as the market price is lower than strike price and exercising the put option will give a profit.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-2-at-the-money-atm-nbsp\">2. At-the-Money (ATM)&nbsp;<\/h3>\n\n\n\n<p>When the current price and the strike price are approximately equal, the option is called an ATM.<\/p>\n\n\n\n<p>For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Strike Price = 24,500<\/li>\n\n\n\n<li>Nifty = 24,500 or around<\/li>\n<\/ul>\n\n\n\n<p>In this case the intrinsic value of the option is almost zero. But the premium can be high as the asset price can move considerably till expiry. Both risk and opportunity are balanced in ATM options.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-3-out-of-the-money-otm-nbsp\">3. Out-of-the-Money (OTM)&nbsp;<\/h3>\n\n\n\n<p>A Call Option is OTM when the current asset price is below the strike price, and a Put Option is OTM when the asset price is above the strike price.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>In Call Option: <\/strong>Strike price is 24,500 and Nifty is currently at 24,000.<\/li>\n\n\n\n<li><strong>In Put Option: <\/strong>Strike price is 24,500 but Nifty is at 24,900.<\/li>\n<\/ul>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/trading\/spread-trading\/\">What is Spread Trading?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-american-vs-european-options\"><span class=\"ez-toc-section\" id=\"American_vs_European_Options\"><\/span>American vs European Options<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In option trading, there are two types of options based on the exercise conditions:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>American Options : <\/strong>These types of options can be exercised on any day before expiry.<\/li>\n\n\n\n<li><strong>European Options : <\/strong>Can be exercised only on the expiry day but can be traded on exchanges before expiry. In India, options are of European type.<\/li>\n<\/ul>\n\n\n\n<p>The value, risk and profit of each option depends on whether it is ITM, ATM or OTM, and whether it is American or European. Choosing the correct option at the right time is the most important skill for a trader.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-key-differences-between-call-and-put-options\"><span class=\"ez-toc-section\" id=\"Key_Differences_Between_Call_and_Put_Options\"><\/span>Key Differences Between Call and Put Options<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">Basis<\/th><th>Call Option<\/th><th>Put Option<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\">Right<\/td><td>Right to purchase underlying asset at strike price<\/td><td>Right to sell underlying asset at a strike price<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">Buyer\u2019s Expectation<\/td><td>The market price will go up&nbsp;<\/td><td>The market price will go down&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">Maximum Profit<\/td><td>Theoretically unlimited&nbsp;<\/td><td>Limited as asset price can fall to zero<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">Maximum Loss<\/td><td>The amount of premium (money paid to buy the option)<\/td><td>The amount of premium (money paid to buy the option)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Read Also: <\/strong><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/options\/greeks\/\">What are Option Greeks?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-advantages-amp-risks-of-options-trading\"><span class=\"ez-toc-section\" id=\"Advantages_Risks_of_Options_Trading\"><\/span>Advantages &amp; Risks of Options Trading<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-benefits-of-option-trading\">Benefits of option trading<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Hedging:<\/strong> A strategy that uses options to protect against potential losses in bearish market conditions.<\/li>\n\n\n\n<li><strong>Flexibility:<\/strong> Traders can profit from both bullish as well as bearish price movements using call and put options.<\/li>\n\n\n\n<li><strong>Less capital required:<\/strong> Options trading require less capital than buying or selling an equivalent quantity of underlying asset.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-risks-of-option-trading\">Risks of option trading<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Loss of capital:<\/strong> The maximum loss is the premium paid for the option buyer, which can be lost completely. In case of option sellers, the losses can be significant.<\/li>\n\n\n\n<li><strong>Time Decay:<\/strong> The value of the option decreases over time, which can lead to losses even if the market doesn\u2019t move against your position.<\/li>\n\n\n\n<li><strong>Complexity:<\/strong> It is not easy to understand the technical aspects of options, making them unsuitable for beginners.<\/li>\n\n\n\n<li><strong>Market volatility:<\/strong> During periods of high volatility, the option premiums can fluctuate sharply.<\/li>\n\n\n\n<li><strong>Timing:<\/strong> In option buying, losses occur if your judgement regarding market movement or timing is wrong, i.e. the expected movement must occur before expiry.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\" id=\"h-understanding-risk-and-reward-is-important\">Understanding risk and reward is important<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Proper knowledge, timing, and strategy are very important for success in option trading.<\/li>\n\n\n\n<li>Trading without complete information can lead to financial losses.<\/li>\n\n\n\n<li>One should always learn ways to manage one&#8217;s risk so that losses can be limited.<\/li>\n\n\n\n<li>With the right research and learning, superior returns can be expected from option trading.<\/li>\n<\/ul>\n\n\n\n<p><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/trading\/best-trading-apps-in-india\/\">Best Trading Apps in India<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-pro-tips-for-beginners-in-options-trading\"><span class=\"ez-toc-section\" id=\"Pro_Tips_for_Beginners_in_Options_Trading\"><\/span>Pro Tips for Beginners in Options Trading<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>You can follow the below-mentioned tips to trade options profitably:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Option Trading Tips for Beginners : <\/strong>To be successful in option trading, some basic but important things should be kept in mind. In the beginning, it is important to do paper trading to understand the market fluctuations. This helps in understanding the trading process, developing profitable strategies without investing real money.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Importance of Risk Management : <\/strong>There is always a risk in option trading, so it is very important to learn risk management. Proper risk management helps avoid major losses.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Use of options for hedging : <\/strong>Call and put options can be used for hedging. This means protecting your portfolio from the uncertainties of the market, so that sudden decline in portfolio value can be avoided.<\/li>\n<\/ul>\n\n\n\n<p>By following these tips, the initial path of trading becomes easier and better decisions can be taken with experience.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Understanding call and put options before trading them is very important for any trader. Knowing the basics of these options and understanding their advantages and disadvantages is the key to success. It is very important to have technical knowledge and the right trading strategy before stepping into option trading. Only by mastering the basics, does the probability of earning profits in options trading increase. It is advised to consult a financial advisor before trading options.<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">S.NO.<\/th><th class=\"has-text-align-left\" data-align=\"left\">Check Out These Interesting Posts You Might Enjoy!<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>1<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/best-time-frame-for-swing-trading\/\">What is the Best Time Frame for Swing Trading?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>2<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/what-is-mcx-trading\/\">MCX Trading: What is it? MCX Meaning, Features &amp; More<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>3<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/commodity\/silver-futures-trading\/\">Silver Futures Trading \u2013 Meaning, Benefits and Risks<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>4<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/commodity\/crude-oil-trading\/\">What is Crude Oil Trading and How Does it Work?<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>5<\/strong><\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/trading\/what-is-day-trading\/\">What Is Day Trading and How to Start With It?<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faqs\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3 class=\"\">What is a call option?<\/h3><p class=\"saswp-faq-answer-text\">A call option is a contract that gives the buyer the right, but not the obligation, to buy an asset at strike price.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">What is a put option?<\/h3><p class=\"saswp-faq-answer-text\">A put option is a contract that gives the buyer the right, but not the obligation, to sell an asset at a specified price.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How does a call option work in the share market?<\/h3><p class=\"saswp-faq-answer-text\">When the stock price moves above the strike price at expiry, the buyer of the call option can exercise the option and buy at a lower price and sell the asset immediately at the higher current market price.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">What is the main difference between call and put options?<\/h3><p class=\"saswp-faq-answer-text\">A call option gives the right to buy, while a put option gives the right to sell.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">What is premium in options?<\/h3><p class=\"saswp-faq-answer-text\">The premium is the price that has to be paid to buy the option.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Is options trading risky?<\/h3><p class=\"saswp-faq-answer-text\">Yes, options trading involves considerable risks, so knowledge about the options concepts, trading strategies and caution is required.<\/p><\/ul><\/div>","protected":false},"excerpt":{"rendered":"<p>Option trading begins with two important terms, Call and Put. These terms may seem technical at first, but these instruments are crucial in designing trading strategies to take advantage of different market situations.&nbsp; In this blog, we will analyze both these options in detail along with their meaning, differences and examples. What is Call Option? [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":18802,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"class_list":["post-18770","trading","type-trading","status-publish","format-standard","has-post-thumbnail","hentry","category-trading"],"acf":{"freelancer":"Harjyot"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.13 (Yoast SEO v21.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Call and Put Options: Meaning, Types, Difference &amp; Examples - Pocketful<\/title>\n<meta name=\"description\" content=\"Learn the basics of call and put options, trading strategies, and risk management in this quick, comprehensive guide.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Call and Put Options: Meaning, Types, Difference &amp; 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