WHAT IS OPTION?
CALL OPTION
If you think a stock price is going to go up, then there are 3 trades that you can make to profit from a rising stock price:
- you can buy the stock
- you can buy call options on the stock, or
- you can write put options on the stock
Buying stock need huge capital investment plus your total capital is @ risk
Writing put option also need huge margin and risk associated with it is unlimited
Buying call option give u unlimited profit upside and limited risk downside.
Only enemy of call option is time so u should book your profits as early as possible.
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