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Explain the difference between a call option and a put option. Would you use options in...

Explain the difference between a call option and a put option. Would you use options in your personal investment portfolio? A substantial initial response comprising a minimum of 100 words is required.

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Answer #1

Call option: Holder of the call option will have a right to purchase the underlying asset at strike price, as he is receiving the right he has to pay the premium to the writer of call option. so the holder of the call option will exercise the right if situation is favourable to him(Market price > strike price)

Put Option: Holder of he put option will have a right to sell the underlying assert at strike price,as he is receiving the right he has to pay the premium to the writer of Put option. so the holder of the Put option will exercise the right if situation is favourable to him(Market price < strike price).

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