Four Basic Option Positions
Call Options
(1) Call options give the holder (buyer) the right (but not the obligation) to buy the underlying asset at the strike price any time until the expiry date.
(2) Call options obligate the writer (seller) to sell the underlying asset at the strike price any time until the expiry date.
Note: the writer has the exact opposite position in comparison to the holder, this is because they are on opposite sides of the same contract.
Put Options
(3) Put options give the holder (buyer) the right (but not the obligation) to sell the underlying asset at the strike price any time until the expiry date.
(4) Put options obligate the writer (seller) to buy the underlying asset at the strike price any time until the expiry date.
Note: the writer has the exact opposite position in comparison to the holder, this is because they are on opposite sides of the same contract.
| Summary of the Four Basic Options Positions | ||
|---|---|---|
|
Holder (Buyer) |
Writer (Seller) | |
|
Call
Options |
Right to
Buy |
Obligation to
Sell |
|
Put
Options |
Right to
Sell |
Obligation to
Buy |
Copyright © 2004-2008 Delta Interval, Inc.(www.deltainterval.com), All Rights Reserved. Legal Notice.