Option Trading

Participants in Option Trading

There are generally four types of participants in the options market:

Buyers of Calls: Expect the price of the underlying to go up.

Sellers (Writers) of Calls: Expect the price to remain the same or fall.

Buyers of Puts: Expect the price of the underlying to go down.

Sellers (Writers) of Puts: Expect the price to remain the same or rise.

Buyers have limited risk (the premium paid) and unlimited profit potential, while sellers have limited profit (premium received) but unlimited potential risk.