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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?

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Answer #1

Call option: An agreement which provides buyer the right and not the obligation to buy a security is the price exceeds that the exercise price of the security or assets. It is profitable when security prices rise.

Put option: An agreement which provides buyer the right and not the obligation to sell a security is the price falls below the exercise price of the security or assets. It is profitable when security prices falls.

Yes we should use options in personal investment portfolio to hedge our investment against price rise or fall.

Please Discuss in case of Doubt

Best of Luck. God Bless
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