Calls and puts are the two basic building blocks of every options strategy. A call is fundamentally a bet that a stock will rise; a put is a bet that it will fall. But whether you buy or sell them changes everything about your risk, so it pays to understand all four basic positions.
Open the Long Call calculator →A call gives the buyer the right, but not the obligation, to buy 100 shares at a fixed strike price before expiration. You buy calls when you expect the stock to rise.
Buying a call has limited risk (the premium paid) and theoretically unlimited upside. Selling a call collects premium but takes on risk if the stock rises — unlimited if the call is naked, capped if it is covered by shares.
A put gives the buyer the right to sell 100 shares at the strike. You buy puts to profit from a falling stock or to hedge shares you already own.
Buying a put has limited risk and a large profit if the stock drops toward zero. Selling a put collects premium and obligates you to buy the stock at the strike if assigned.
“Long” means you bought the option and paid premium; “short” means you sold it and collected premium along with an obligation. Combining long/short calls and puts creates every strategy that exists.
A simple rule: buyers have defined risk and pay for the chance of a big move; sellers collect income but take on larger, sometimes open-ended, risk.
Both profit from a decline, but a long put has defined risk (the premium) and an expiration date, while short selling has open-ended risk and no expiry.
No — if you buy (go long) a call or put, the most you can lose is the premium. Selling options is where larger losses can occur.
It is automatically exercised: a call buyer receives shares, a put buyer sells shares, at the strike price.
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