We think that this article will be useful for every novice trader because beginnings are hard. People sometimes don’t even know what Call or Put stands for.
So what is the difference between these two, and how do you trade using these options? Let’s see in this article.
You can easily find these trading buttons when using IQ Option mobile app and same buttons but named “Higher” and “Lower” in web or desktop IQ Option’s app. The ‘call button’ is color green and ‘put button’ is in red. You will also find arrows that always represent the direction of these options (see image below). To fully understand how it works, let’s use the FX Options by IQ Option instrument as an example.
If trading with the FX Options, you are expected to complete a number of decisions. One decision is the amount that you want to invest. You also need to identify the strike price. What is the strike price? Read below.
Understanding the meaning of the strike price
This is the target price that you think the asset will reach before the identified expiration time. When setting the strike price, you will also note the option price since it’s also used in calculating the results of the deal. The strike price can be below or about the current price. What’s important is how far the price is from the strike price at the time of expiration. But the most important is the direction you chose.
Basics of Put and Call Options
After identifying the strike price, you will need to predict the movement of the price. To make this happen, you can use the put and call buttons in your mobile app (as we described above).
Select ‘Call’ if you think that the asset’s price will rise and click ‘Put’ if you expect that the price will fall. To determine the outcome, you will need to configure the strike price and the asset price position relative to the strike.
Variations for Put and Call Options
As we said at the beginning of the article – If you are using your desktop to trade, you will find “Higher” and “Lower” in place of Call and Put buttons.
You will pick ‘Higher’ if you expect that the price will increase and select ‘Lower’ if you think that it will fall. When trading Forex, Crypto, CFDs, and Stocks, you will notice ‘Buy’ and ‘Sell’ instead of ‘Higher’ and ‘Lower’. All of these instruments work the same way but will not feature an expiration.
With this information, you are now ready to make a trade and choose between the two decisions. If you need additional details and guidance on how to make the trade, you can check out the fundamental and technical analysis, which are two very basic trading strategies. Also, we recommend that you to use IQ Option free demo account first before investing your hard-earned money!
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