Buying Calls
Gives the buyer the Right to purchase the underlying security or future at a set exercise price for a limited period of time. The investor that buys calls wants the market price of the underlying asset to rise.
Selling Calls
Obligates the seller to sell the underlying security or future at a set exercise price for a limited period of time, if exercised. The investor that sells calls wants the market price of the underlying asset to remain the same or fall in price modestly.
Buying a Put
gives the buyer the Right to sell the underlying security or future at a set exercise price for a limited period of time. The investor that buys a put wants the market price of the underlying asset to go Down.
Short Puts
Selling a Put obligates the seller to buy the underlying security or future at the set exercise price for a limited period of time, if exercised. An investor that sells puts wants the market price of the underlying asset to remain the same or rise modestly.
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