The essence of options is to gain the right to choose by paying a certain royalty. Options can be divided into call options and put options.

call option

call option means that the buyer of an option has the right to buy an agreed number of relevant futures contracts from the option seller at the pre-agreed price, that is, the strike price, within the validity period of the option contract, but does not have the obligation to buy them. If the option buyer doesn't want to buy futures, he just needs to let the contract expire.

if someone wants to buy, the call option holder can also resell the call option. Therefore, the call option is an option for the buyer. If the market is favorable to him, he can choose to implement it, otherwise he can give up. However, for the seller who has received the option premium, he is obliged to sell the relevant futures contract at the execution price specified in the option contract at the request of the option buyer within the validity period specified in the option. Therefore, because the buyer pays the seller the royalty, the call option is an option for the buyer, but an obligation for the seller.

put option

put option, also known as put option, put option, seller option, put option, deferred option or knock-out option, means that the buyer of the option has the right to sell a certain amount of the subject matter at the exercise price within the validity period or exercise date of the option contract.

The difference between them

1. Put option is put, which means that the subject matter will fall within the contract. If the market price of the underlying asset falls below the price agreed in the option in the future, the buyer of the put option can make a profit by selling the underlying asset at the exercise price. If the market price of the underlying asset rises above the price agreed in the option in the future, the buyer of the option can give up the right. The call option is a call, which means that the subject matter will rise in the contract. If the stock price on the maturity date is higher than the exercise price, then the call option is in real value, and the holder will exercise the option and gain income. If the stock price on the maturity date is lower than the exercise price, then the call option is in a virtual value, and the holder will not exercise the option. At this time, the value of the call option is .

2. The biggest loss of the buyer who subscribes for the option is the royalty, and with the continuous rise of the positive share price, its profit is unlimited; The seller's biggest profit is royalty, and with the increase of the positive share price, its loss is infinite. The biggest loss of the buyer of put option is the premium, and with the continuous decline of the positive share price, its profit is infinite; The seller's biggest profit is royalty, and with the continuous decline of the positive share price, its losses are infinite. Originated from: option sauce

transaction mode of call put option

transaction mode of call option:

buy call option: the investor buys the call option contract, pays the premium (option fee), and obtains the right to purchase the underlying assets at a specific price in the future. This strategy is suitable for investors to expect the underlying asset price to rise.

selling the call option: the investor sells the call option contract and collects the royalty, but at the same time undertakes the obligation to sell the underlying assets at a specific price in the future. This strategy is suitable for investors who believe that the price of the underlying assets will not rise sharply, or who are willing to obtain additional income on the basis of option fees.

exercise call option: investors who hold call options can choose to exercise their rights when the options expire and purchase the underlying assets at a specific price. Exercise usually requires payment of execution fees.

transaction mode of put option:

buy put option: investors buy put option contracts, pay royalties and get the right to sell the underlying assets at a specific price in the future. This strategy is suitable for investors to expect the underlying asset price to fall.

sell put option: investors sell put option contracts and collect royalties, but at the same time undertake the obligation to buy the underlying assets at a specific price in the future. This strategy is suitable for investors who believe that the price of the underlying asset will not drop sharply, or are willing to get additional income on the basis of option fees.

exercise put option: investors holding put options can choose to exercise their rights when the option expires and sell the underlying assets at a specific price. Exercise may also require payment of execution fees.