Different Types Of Options

Basically there are two kinds of options: Call options and Put options. You "buy to open"(to open an options position) and "sell to close"(to close the options position and lock in the profit) a CALL option to benefit from a RISE in stock price/option(hyphens included since options tend to follow the underlying stock price) and you "buy to open" and "sell to close" a PUT option to benefit from a FALL in stock price/option. Also instead of "buying to open and sell to close" you can also "sell to open and buy to close". We won't be discussing those here, neither are we going to discuss the different option strategies there are out there. Also, the next few sections will discuss concepts in the context of Standard Options(not Mini or Weekly options) and Market Orders to keep it simple.

The purpose is to inform you how you can use options to leverage and make money either from a rise or a fall in stock/option in its simplest form without getting involved in a lot of complex terminologies and concepts surrounding options, so you can quickly understand and make use of it. You can take the same concepts and apply them to Mini and Weekly options as well.

Summary

Type of Options Purpose How to open a position How to close the position and lock in profit
Call To Benefit from an increase in stock/option price Buy to open Sell to Close
Put To Benefit from an fall in stock/option price Buy to open Sell to Close




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