Selling options involves covered and uncovered strategies. A person would buy a put option if he or she expected the price of the underlying futures contract to move lower. Then, he or she would make the appropriate selections (type of option, order type, number of options, and expiration month) to place the order. Call options are a type of option that increases in value when a stock rises. Buy a Call Conclusion: If you are sure that a stock is going to pop up a few points before the next option expiration date, it is the most profitable (and the most risky) to buy a call option with a strike price slightly higher than the current stock price. The puts and the calls are both out-of-the-money options having the same … A put option gives the buyer the right, but not the obligation, to sell the underlying futures contract at an agreed-upon price—called the strike price—any time before the contract expires. Put options give the holder the right to sell shares of an underlying security at a fixed price, known as the strike price, by an expiration date. Obviously when you buy an option your risk is limited to the premium you pay. Risks of Call vs Put Options The biggest risk of a call option is that the stock price may only increase a little bit. Broadly both are bearish strategies and the difference between a call and put option is that while the former is a right to buy the later is a right to sell. It is one of the two main types of options, the other type being a call option. A put option is an option contract that gives the buyer the right, but not the obligation, to sell the underlying security at a specified price (also known as strike price) before or at a predetermined expiration date. The holder of the put option pays the writer of that put option a premium for the right. Selling calls. They allow the owner to lock in a price to buy a specific stock by a specific date. The call buyer has the right to buy a stock at the strike price for a set amount of time. If the price of the underlying moves above the strike price, the option will be worth money (it will have intrinsic value). Many F&O traders normally are confused between buying a put option versus selling a call option. If the holder exercises his right and sells the shares of the underlying security, then the writer of the put option is obligated to buy the shares from him. A covered call, for instance, involves selling call options on a stock that is already owned. This would mean you could lose money on your investment. For that right, the call buyer pays a premium. A collar is an options trading strategy that is constructed by holding shares of the underlying stock while simultaneously buying protective puts and selling call options against that holding.