OPTION BUYING VS SELLING

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OPTION BUYING VS SELLING







Option Buying

 You pay a premium to buy an option.

  You have limited risk (only the premium paid).

  You have unlimited profit potential.

  You are hoping the market moves strongly in your favour.

  Example: You buy a Call Option if you think the stock will go up.

Option Selling

 You receive a premium when you sell an option.

 You have limited profit (only the premium you received).

 You have unlimited risk (if the market moves against you).

 You are hoping the market stays stable or moves slowly.

 Example: You sell a Call Option if you think the stock will stay flat or go down.

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