Call Options

Call options give a person the right to purchase shares (usually in 100 increments) of a company's stock at a certain price (strike price) for a certain amount of time. This means that if a person has a call option for 100 shares of a stock at $15.00 per share, he can buy those shares at that price from the date of purchase to the option expiration date even if the stock price rises during that time. If a person believes a stock is going to rise quickly, a call option can allow him to save quite a bit of money on his purchase.

A put option functions in much the same way as a call option. However, it gives a person the right to sell shares at the strike price for a certain period of time. People who think a stock is going to drop will often go with put options, because they will be able to sell at a price higher than that of the market price. Both call and put options grant people the right to trade, but a person is not obligated to follow through on the transaction.

Call Options on the Web

When stock trading first came to the Internet, most sites were very basic. People could buy and sell stocks, but that was usually all they could do. Sites have become far more complex, and now there are many services that day traders and amateur investors can use. Call options are now available from a number of online stock trading companies.

Call options will not always pay off. A person needs to recognize when he should or shouldn't exercise an option. The best websites will allow a person to contact a professional before getting involved with call options for the first time.