What are put option,call option?

1.Buy Call :- A right to purchase on a later date at a specific price decided today.

Illustration :- suppose today price of a share is Rs.500/- I am expecting prices to increase to 600 level in on 30/09/2012 and on that day I dont want to purchase at such higher rate. 

So I will purchase an option to purchase that share on 30/09/2012 for say Rs.550/- or any price lower than Rs. 600/-

2.Sell Call :- A duty to sell on a later date at a specific price decided today.

3.Buy Put  :- A right to sell on a later date at a specific price decided today.

Illustration :- suppose today price of a share is Rs.500/- I am expecting prices to decrease to 400 level in on 30/09/2012 and on that day I dont want to sell at such lower rate. 

So I will purchase an option to sell that share on 30/09/2012 for say Rs.495/-

4.Sell Put :-  A duty to purchase on a later date at a specific price decided today.

thank u very much.Mr. Sankalp

@ Sankalp i dnt understand 1 thing y do we need put option whn we can use call option for making future sale/purchase??? put option is just d reverse of call in terms of sale/purchase

Hey archana

your answer is posted on https://www.jumboteam.net/why-do-we-needd-a-put-option/

Please refer

regards

sankalp

ya bt cnt we use sell call for future sales???

Refer this page archana for your answer

https://www.jumboteam.net/why-do-we-needd-a-put-option/#comment-8

Archana 

Kindly refer to the previous link

I have posted your answer there.

Originally posted by : SANKALP PATWA
	1.Buy Call :- A right to purchase on a later date at a specific price decided today. Illustration :- suppose today price of a share is Rs.500/- I am expecting prices to increase to 600 level in on 30/09/2012 and on that day I dont want to purchase at such higher rate.  So I will purchase an option to purchase that share on 30/09/2012 for say Rs.550/- or any price lower than Rs. 600/- 2.Sell Call :- A duty to sell on a later date at a specific price decided today.   3.Buy Put  :- A right to sell on a later date at a specific price decided today.   Illustration :- suppose today price of a share is Rs.500/- I am expecting prices to decrease to 400 level in on 30/09/2012 and on that day I dont want to sell at such lower rate.  So I will purchase an option to sell that share on 30/09/2012 for say Rs.495/-  or any price higher than 400. 4.Sell Put :-  A duty to purchase on a later date at a specific price decided today.

I had checkd out ur link previously....(before u posted d same link agn) it didnt answer my question i posted next.The highlited text has the same meaning perhaps there is a significance of the word 'right; and "duty".

plz explain

Originally posted by : Archana Das
	@ Sankalp i dnt understand 1 thing y do we need put option whn we can use call option for making future sale/purchase??? put option is just d reverse of call in terms of sale/purchase

Buying PUTS isnt the opposite of selling CALLS !

When you BUY a PUT or a CALL, you BUY a RIGHT, to Sell or Purchase the Stock/underlying at a Given Strike price respectively, BUT you dont have an OBLIGATION to do so.

When you SELL a PUT or a CALL, you are under an OBLIGATION to Purchase or SELL stocks/underlying at a given Stike price respectively.

To explain it very briefly, the thumb rule is, if you BUY a CALL or a PUT, the RISK is Limited whereas the PROFIT (theoretically) is Maximum/unlimited.

If you SELL a CALL or a PUT, The PROFIT is Limited whereas the RISK is Unlimited.

For better understanding, I would suggest you go through this link/tutorial, which is pretty informative.

https://www.investopedia.com/university/options/default.asp

Some more reading on Risks w.r.t. Options.

https://www.optiontradingpedia.com/option_trading_risks.htm

Cheers.

Originally posted by : Archana Das
	@ Sankalp i dnt understand 1 thing y do we need put option whn we can use call option for making future sale/purchase??? put option is just d reverse of call in terms of sale/purchase

@ Archana we cannot use call option for making future sales.

and yes put option is just d reverse of call in terms of sale/purchase.

If this is not d answer to your query, then i m not getting your question rightly.

:-(

Extremely sorry.