What is the effect of selling a Call Option?

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• What is the effect of buying a Call Option?

  The buyer of the call option has the right, but not an obligation, to buy the underlying asset at the strike price at expiry. The buyer of a call option has to pay a ‘Premium’ to the seller for the privilege.

• What is short selling?

  Short selling is a trading strategy that involves borrowing and selling a security that you do not own, hoping to buy it back later at a lower price and make a profit. It is a way of trading with the anticipation on the decline of a security’s price. ...

• What is the effect of selling a Put Option?

  The seller of the put option has an obligation to buy the underlying asset at the strike price if the buyer chooses to execute his right. The seller receives a premium from the buyer.

• When does the buyer of a call option benefit?

  The buyer of the call option benefits when the price of the underlying asset is above the strike price at the expiry of the contract.

• When does the seller of a call option benefit?

  The seller of the call option benefits when the price of the underlying asset is below the strike price at the expiry of the contract.