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The Call Option allows you to purchase the underlying at a specific price and for a certain period of time, but not the obligation. The Put Option gives you the option to sell the underlying at a specific price and within a defined time.
If you are bearish and want to make a profit from the downturn in the price of an underlying, you can either sell or buy a Call Option.
The difference between buying and selling a call option
Selling a Call Option earns you a premium | To buy a put option, you pay a premium |
Your profit is only as high as the premium you receive. | Profit is endless |
If the price of the underlying increases significantly, you can lose everything. | Your losses are limited by the brokerage fee paid and the premium you paid. |