Environmental Sciences, asked by mausam65, 1 month ago


Distinguish between call option and put option contract. Explain with
examples as to how an investor should use them to minimise the risk and
maximise return.​

Answers

Answered by shaikha10493
3

Answer:

Call options

Calls give the buyer the right, but not the obligation, to buy the underlying asset at the strike price specified in the option contract. Investors buy calls when they believe the price of the underlying asset will increase and sell calls if they believe it will decrease.

Put options

Puts give the buyer the right, but not the obligation, to sell the underlying asset at the strike price specified in the contract. The writer (seller) of the put option is obligated to buy the asset if the put buyer exercises their option. Investors buy puts when they believe the price of the underlying asset will decrease and sell puts if they believe it will increase.

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Answered by meenagotiwale
5

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