Call and put options are a typical derivative (a contract that derives its value from the performance of an underlying assets like stocks, indices, commodities, currencies, exchange rates, or the rate of interest) that provides rights to the buyer. However, there’s no obligation to purchase or sell the underlying asset within a specific date or at a specified price.
Options are classified into 2 categories- call option and put option. Both the call and put option are further classified into American-style options and European-style options:
American Style Options
The American/US options can be exercised anytime prior to the expiration date.
European Option Contracts
The European options can be exercised only on the expiration date.
We deal in the call and put options belonging to the US option contracts which can be seamlessly squared off anytime before the expiration date and are not bound with the specific expiration date and time.
Today, this derivative guide will provide you with valuable insights into what are call and put options. Please stay tuned until the end to learn more about it.
Call Option
An option contract which provides the purchasing rights to a buyer which gives the buyers privilege to purchase a particular derivative like a stock, at a certain price and these contracts come with expiry dates.
Put Option
An option contract which provides a buyer with the right to sell the underlying asset at the specified strike price within the expiration time. However, there is no obligation for the buyer to do the same.
[…] Study: When a Triple Top Pattern forms, it indicates a loss of buying momentum and the emergence of selling pressure. The first peak represents the exhaustion of bullish buying, resulting in a minor pullback. However, the subsequent rally fails to break the previous high, forming the second peak. This failure further reinforces the resistance level and attracts bearish traders. The price retraces, but the subsequent rally falls short of breaking the resistance level for the third time, forming the third peak. At this point, sellers overpower buyers, leading to a significant downward move, often resulting in a trend reversal. […]