Are you wondering what Call or Put means? Buying or Selling? Higher or Lower?! Don’t fret! It can be a little confusing, but we’re here to simplify this important concept for you. Let’s start at the very beginning.
When you’re working with Options, you’ll need to make a few key decisions. The first decision, of course, is the amount you wish to invest. Then you’ll need to choose the expiration time, and, if you are trading Digital Options – the strike price. Strike is the level, which the asset price must reach, the profit level will also depend on which strike price you choose.
What is the strike price?
The strike price is the price you believe the asset will reach and go beyond within the expiration time. You may want to choose a strike that’s above or below the current asset price. What really matters is how far the price is from the strike at the moment of expiration. Of course, the direction you choose is the biggest factor.
What is Call and Put?
Once you’ve chosen the strike, you’ll need to decide which direction the price will go. This is where the Call and Put buttons come into play!
Click Call if you think that the price will rise, or click Put if you assume that the asset price will fall. You will need to adjust the strike price as well as the position of the asset price, in relation to the strike you choose.
Call, Put and their variations
If you’re trading using a computer, you’ll see Higher and Lower options instead of Call and Put. Despite the change of wording, the definition stays the same. The Higher option is for the prediction of a price increase, whilst the Lower option is the prediction of a decrease in price.
However, with other assets like CFDs, Forex, Stocks or Crypto, you’ll see Buy and Sell buttons, instead of Higher or Lower. Again, these work in a very similar way, but there is no expiration time. Nevertheless, when you’re opening a deal, you’ll need to make your decision and click Buy if you think the price will rise, and Sell if you think it will go down.
So there you go, we’ve simplified the Call and Put buttons. You’re now ready to make a decision about the price direction. If you’re not sure what to go for, however, don’t hesitate to read about technical and fundamental approaches to market analysis and practice, before you use your real money.