When you buy an option, you have the , but not the obligation , to trade the stock. Long Call (Bullish) Goal : You expect the stock price to rise . Right : You can buy the stock at the strike price. Risk : Limited to the premium paid.
When you sell an option, you receive the premium upfront but take on an if the buyer chooses to exercise their right. Short Call (Bearish or Neutral) Options Trading Basics | How to Buy & Sell Calls and Puts buying and selling calls and puts
: This is the price you pay (as a buyer) or receive (as a seller) for the contract. If an option is quoted at , the actual cost is When you buy an option, you have the
: One standard equity option contract typically controls 100 shares of the underlying stock. Risk : Limited to the premium paid