There are two types of options:

A **call option** gives you the right, but not obligation, to **buy** the underlying asset.

A **put option** gives you the right, but not obligation, to **sell** the underlying asset.

## Four Basic Option Trades

Besides two types of options, there are two sides to every option trade: you can buy an option, or you can sell an option.

Therefore, the are four things you can do with options:

- Buy a call option (makes you “long call“)
- Sell a call option (makes you “short call“)
- Buy a put option (makes you “long put“)
- Sell a put option (makes you “short put“)

Buying a call option is not the same thing as selling a put option, and buying a put is different from selling a call. These positions are all very different. They differ in two dimensions:

- Whether you buy or sell the underlying asset.
- Whether you have the right (but not obligation) or obligation (but not right).

## Call Option Buyer and Seller Positions

While a call option **buyer** gets the **right, but not obligation, to buy** the underlying asset at the option’s strike price, the call option **seller** (the other party of the option trade) takes an **obligation to sell** the underlying asset to the call option buyer if the buyer chooses to exercise the option.

While an option buyer has a right but not obligation, an option seller has the opposite position: obligation but not right. The option seller’s outcome depends on the option buyer’s will.

## Put Option Buyer and Seller Positions

A put option **buyer** has the **right, but not obligation to sell** the underlying asset for the strike price, while the put option **seller** has the **obligation to buy** the underlying asset from the put option buyer, if the option buyer chooses to exercise the option.

## Overview

If the above seems confusing, remember there are two different securities involved: the option and the underlying security.

Here is a summary:

**Call**option**buyer**has**right**to**buy**underlying.**Call**option**seller**has**obligation**to**sell**underlying.**Put**option**buyer**has**right**to**sell**underlying.**Put**option**seller**has**obligation**to**buy**underlying.

Remember:

- Option buyers have right.
- Option sellers have obligation.
- With call options, direction is the same for the option and the underlying (call buyer buys underlying, call seller sells underlying).
- With put options, direction is opposite (put buyer sells underlying, put seller buys underlying).