A new trader is quite confused between call and put or related words.
Like:
Call buying
Put buying
Call writing/selling
Put writing/selling
Etc.
Let's say as always, this confusion will not remain after today.
Look, we know better that two participants are always active in the market. One buyer who buys the stock and every other seller who sells the stock.
The buyer always expects that the price of the stock will rise and the seller always thinks that the price of the stock will fall.
Now let's come to option trading:
The word call is used here for the rising market and the word put is used for the falling market.
Option buyer:
If a person wants to trade the rising market, he buys a call.
On the other hand, if he wants to trade the falling market, he will buy a put.
Option Writer/Seller:
It is obvious that selling is always against buying. So if a person wants to trade a rising market, he will sell a put.
Why will he sell a put?
Because put is a symbol of a falling market. That is, if he is selling a falling market, then his direction is bullish.
If a person wants to trade a falling market, then he will sell a call.
Why will he sell a call?
Because call is a symbol of a rising market. That is, if he is selling a rising market, then his direction is bearish.
Hope the post will be useful for you.
Thank you
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