There are two types of options:
- Call option
- Put options
Call option gives the holder the right (but not the obligation) to purchase such shares until the expiration of certain options by right (pre) determined price.
Put - option gives the holder the right (but not the obligation) to sell such shares of certain firms to the date of expiry of the options at right (pre) determined price.
Buyer Call options - buyer buy an option with the expectation that the price of (eg) the shares rises above the executive (strike) price at which the voice and thus wants to make a profit. In contrast to the purchaser, the writer-Call options (and the holder of shares) is hoping that stocks will rise over the price at which the voice option and that option will expire worthless and he left the entire premium, which is collected. Many large investors are earning good money on writing options and performance statistics, i.e. default option is going in favor of them.
In the event however that the price of that stock rises above the price of the option and the holder submits to the execution, the writer has the option to sell their shares at a price that was "promised" that is listed as an option. So he has to sell their shares below the price that is currently on the market or purchase option which I wrote back and pay to the holder of a market recognized the difference in price.
Buyer Put options – buyer buys an option with the expectation that the price of (eg) the shares fall below the executive (strike) price at which the voice and thus wants to make a profit. In contrast to the purchaser, the writer Put - Options are hoping that the price of that (eg) the shares will not fall below the price at which the voice option and that option will expire worthless and he left the entire premium, which is collected. If the price falls below the price specified in the option, the option writer is obligated to purchase from the holders of stock options at a price that was "promised" that is listed as an option. So he must buy shares at a higher price than the current market.
On the other hand, the option holder can buy the same stock cheaper in the market and then sell them on the basis of the options.
