What is a call option?

A call option represents the right (but not the requirement) to purchase 100 shares of stock at a pre-determined 'strike price' before an expiration date. If the stock price rises above the strike price, you can sell the options contract for a profit.

What is a put option?

A put option represents the right (but not the requirement) to sell a set number of shares of stock (at a pre-determined "strike price" before an expiration date. If the stock drops below the strike price, you can sell the options contract for a profit.

Call vs. Put Options: What's the Difference?

Here's a full rundown of call options, put options, and how you can make money with them.

By Lyle Daly – Updated May 11, 2026 at 4:29 PM EST | Fact-checked by Frank Bass

Key Points

Call options grant the right to buy stocks at a set price until expiration; puts allow selling.
Options expire worthless if stock doesn't reach breakeven, risking the premium paid.
Selling options can yield profits but exposes sellers to potentially large losses.

If you're interested in options trading, one of the first things to learn is the difference between call options and put options. You'll see these terms used frequently, so understanding them is a must.

Loading paragraph...

An infographic showing the difference between a call and a put in options trading — Image source: The Motley Fool

Loading image...

A call option is the right to buy a stock at a specific price by an expiration date, and a put option is the right to sell a stock at a specific price by an expiration date. That's the summary. Now, let's take a closer look at how call and put options work, as well as the risks involved with options trading.

Loading paragraph...

Strike Price

A strike price is the price in an options contract at which the underlying asset can be bought or sold.

Loading paragraph...

Buying options vs. investing in stocks

Options can be riskier than buying and selling stocks because there's a greater possibility of coming away with nothing. When investing in stocks, you only need to predict whether the stock goes up or down, and there's no time limit to get it right. For options trading, you need to predict three things correctly:

The direction the stock will move.
The amount the stock will move.
The time period of the stock movement.

If you're wrong about any of those, then the options contract will be worthless. While there's the potential for greater returns with options, they're also harder to trade successfully.

Despite the challenges of trading call and put options, they offer an opportunity to amplify your returns. That can make them a valuable addition to a balanced portfolio. For investors interested in options, there are also more advanced strategies that go beyond buying or selling calls and puts.

Loading paragraph...

Call vs. put options FAQs

Loading faq...

About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

TMFLyleDaly

@LyleDaly

Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Netflix. The Motley Fool has a disclosure policy.

Call vs. Put Options

Here's a full rundown of call options, put options, and how you can make money with them.

Key Points

Strike Price

Related investing topics

How to Invest in Stocks: 7 Steps to Get Started

How Many Shares of a Stock Should I Buy?

What Are the 11 Stock Market Sectors?

Choosing the Best Retirement Plan for You

Buying options vs. investing in stocks

Call vs. put options FAQs

About the Author

Read Next

Premium Investing Services

How to Invest in Stocks: 7 Steps to Get Started

How Many Shares of a Stock Should I Buy?

What Are the 11 Stock Market Sectors?

Choosing the Best Retirement Plan for You

Call vs. put options FAQs

What is a call option?

What is a put option?

How does a call option work?

Example of a call option

How does a put option work?

Example of a put option

Risks of call options vs. put options

Related investing topics

Buying options vs. investing in stocks

FAQs