Buyers and sellers of options:
Buyer (obligee) of 1. option:
-motivation: expect the market price to change in line with its expectations and gain profits from it.
-Responsibility: Pay royalties (option fees) and have the right to buy (call options) or sell (put options) the underlying assets at a specific price at a specific time in the future.
-Risk: The buyer's risk is limited to the paid royalties. If the market is unfavorable, the buyer can choose not to exercise his rights.
2. Option seller (debtor):
-Motivation: Expecting the market price to remain unchanged or move in the opposite direction in order to get royalties.
-Responsibility: Accepting royalties, having the obligation to sell (call option) or buy (put option) the underlying assets at a specific price at a specific time in the future.
-Risk: The seller's risk is that the market changes in favor of the buyer, which may lead to losses. Theoretically, there is no upper limit for the potential loss of the seller.
Option type:
1. Call option:
-Buyer's rights: * * The buyer has the right to purchase the underlying assets at a predetermined price (exercise price) at some future time.
-Seller's obligations: * * When the buyer decides to exercise its rights, the seller is obliged to sell the underlying assets.
2. Put option:
-Buyer's rights: The buyer has the right to sell the underlying assets at a predetermined price (exercise price) at some future time.
-Seller's obligation: When the buyer decides to exercise his rights, the seller has the obligation to purchase the underlying assets.
In the options market, traders can choose different options types and roles (buyers or sellers) according to their own market views and risk tolerance. Different combinations and strategies can be adopted to adapt to different market conditions and investment objectives.