Question

what the difference between call option and but option ( use your own words

Answer 1

option are of two types one is call option and other is put option. these option gives the buyer the right to exercise at a premium of its cost. the right to buy and sell. Call option gives the right to buy and put option gives the right to sell. the buyer of the optin use the call option when the price of the underlying security go above the strike price and in case of put option exercise when price of the underlying assest goes down below the stirke price.

this can be imagine like a scene where there is going an auction. and a trophy is put on the table to sell. So put means is selling. now the auction table is at height so the everything from hight looks down. which means the put opition is used when the price goes down. On the other hand all the bidder standing below yell to buy which means they call. so the call optins is for buying. they look upward. which means they will exercise the optin when the price go above the stirk price. Thsi scene can be imagine to easily udner stand the call and put option and when it is useful to exercise.

please ask if any doubt, about any point to discuss.