Options Basics: Call and Put Explained

Build a clean foundation in calls, puts, strike price, premium and expiry.

An option is a derivative contract whose value is linked to an underlying asset. A call gives the buyer a right, but not an obligation, to buy the underlying at the strike price subject to the contract terms. A put gives a right to sell.

Students should learn strike price, premium, expiry, intrinsic value, time value and implied volatility before studying complex strategies.

Options can be complex and risky. Education should include payoff diagrams, scenario analysis and risk management rather than focusing only on profit examples.