There are two primary types of options: call options and put options. Call options give the holder of the contract the right to purchase the underlying security, while put options give the holder the right to sell shares of the underlying security. Both can be used to let investors profit from movements in a stock’s price.

Put options are traded on various underlying assets, including stocks, currencies, bonds, commodities, futures, and indexes. A put option can be contrasted with a call option, which gives the holder the right to buy the underlying at a specified price, either on or before the expiration date of the options contract.

These are the differences between call and put options. Simply put, investors purchase a call option when they anticipate the rise of a stock and sell a put option when they expect the stock price to fall. Using call or put options as investment strategy is entirely a game of speculation and assumption.