Buying And Selling Calls And Puts May 2026

: One standard equity option contract typically controls 100 shares of the underlying stock.

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. buying and selling calls and puts

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 : One standard equity option contract typically controls

: 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 Right : You can buy the stock at the strike price

Before placing a trade, you need to understand the basic mechanics:

: The predetermined price at which the stock can be bought or sold.