Wondering what are puts and calls in trading?

Wondering what are puts and calls in trading? They are the two basic types of options contracts that give you the right—but not the obligation—to buy or sell a stock at a set price by a specific date. A call option gives you the right to buy (you’re bullish), while a put option gives you the right to sell (you’re bearish or hedging). Traders use them to speculate on direction, manage risk, or generate income with defined capital at risk. Each option has a strike price, an expiration date, and a premium (the cost). Your profit or loss depends on how the underlying price moves relative to the strike, and how factors like time decay and volatility affect the option’s value. For example, calls gain value as prices rise; puts gain value as prices fall. Newer investors often start by buying calls or puts because the maximum loss is the premium paid. However, options can still be complex, so understanding mechanics, risks, and strategies is essential before placing a trade.

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