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(ALERT) BREAKING: US/China Trade Deal FAILING! Capitalize On It.

By Gregory Mannarino

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Disclaimer: For Education Only

A call is an option that permits its holder to purchase a specific asset at a predetermined price until a certain date. For example, an investor may purchase a call option on General Electric stock that confers the right to buy 100 shares at $25 per share until October 17. Calls are sold for a fee by other investors, who incur an obligation. Investors purchase calls to take advantage of an increase in the price of the asset.

A put option that conveys to its holder the right, but not the obligation, to sell a specific asset at a predetermined price until a certain date. In most cases, puts have 100 shares of stock as the underlying asset. For example, an investor may purchase a put option on GenCorp common stock that confers the right to sell 100 shares at $15 per share until September 21. Puts are sold for a fee by other investors who incur an obligation to purchase the asset if the option holder decides to sell. Investors purchase puts to take advantage of a decline in the price of the asset.

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