What is Options Selling

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What is Options Selling⚠️


Options selling means you are giving someone else the right to buy or sell an asset from you (depending on the type of option), and in return, you receive a premium (money) up front.

Key Terms Before Understanding Selling

  Option: A contract that gives the buyer the right, but not the obligation, to buy/sell something at a fixed price.

Call Option: Right to buy.

 Put Option: Right to sell.

 Premium: Money received (for sellers) or paid (by buyers) for the option.

 Strike Price: The price at which the buyer can buy/sell the asset.

 Expiry Date: The last date the option contract is valid.

Types of Options Selling

💰Selling a Call Option (Call Writing)

You are agreeing to sell the stock at a fixed price.

You hope the stock does not go up much.

If it stays flat or falls, you keep the premium.

💰Selling a Put Option (Put Writing)

You are agreeing to buy the stock at a fixed price.

You hope the stock does not go down much.

If it stays flat or rises, you keep the premium.

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