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Are you trying to decide whether to buy a call vs put option contract? Both types of contracts are fantastic options to make money.
But which should you go for?
Calls and puts have the same goal, buy low and sell at a higher value. But they’re really quite different, involving different approaches.
Use the quick links to jump straight to the different parts of the comparisons.
We’re going to take a look at what exactly calls and puts are, how they differ, and which one is the right to choose.
To put it simple, calls are for traders who believe the price of a stock will go up, and puts are for when traders believe the price of a stock will go down.
The quick answer is, neither is better. The best one to buy depends on the sentiment of the stock. If the sentiment of the market for a stock is bearish, buy puts. If the sentiment of the market for a stock is bullish, then buy calls.
But before buying any puts or calls, you want to make sure when you should buy a put or a call. To find out, you’ll want to draw your Supply & Demand zones, so you can see where the resistance and supports.
When you buy a call, you make money as the stock price is rising. When you buy a put, you make money as the stock price is falling.
To find out how much money you can make on a call or put, you’ll want to see the greeks of a contract such as the Delta & Gamma.
To learn more about Delta & Gamma, give this article a read: “Understanding the Basics of Options for Traders: The Ultimate Beginners Guide in 2022“.
The short quick is answer is it depends. When you’re looking for a contract – puts or calls – you want to look at the greeks, and volume & open interest.
Whether it is puts or calls, a contract with great volume – 500 minimum or greater – will typically be a better contract because it will be easier to buy & sell. It will also move the value of an option contract a much smoother rate.
To learn more about what to seek in a great option contract, give this article a read: “How To Pick The Best Option Contract In 2022 For Option Trading“
The answer is yes, you can buy both calls and puts at the same time–this is called a long straddle option strategy.
Long straddle is an option strategy where it consists of you buying a call and a put contract with the same strike price and the same expiration date.
This type of strategy is used when you’re uncertain of where the stock may go.
If you buy an option contract with different strike price, then this strategy is called a straddle option strategy.
So which will you go with: calls or puts? Both are great options and give you the ability to make money.
If you’re not sure which to pick, try to paper trade first.
It’s easier to play around with fake money, and test each one.
Or simply learn more about the process of finding where buyers and sellers are sitting, then my guide on how to find supply & demand is the perfect primer. It explains everything you need to know, step by step–then you’ll want to see how to pick the perfect option contract to get you up and running. Give it a try today.