“Should I click Call or Put? What does it even mean?” — if you ever asked yourself these questions, you will definitely find this article helpful. Stick until the end to find out once and for all what Call and Put buttons stand for, what to choose and how to trade using them.
You may find these buttons when you trade on your mobile app. Call button is always green, Put button is red. Moreover, you will see helpful arrows right on the buttons, which give you a hint about the meaning. But let’s start from the very beginning and see examples from the FX Options instrument.
When working with FX Options, you need to make several decisions. The first one is, of course, your investment amount. Then you need to choose the strike price — the level which the asset price has to reach.
As the percentage on FX Options is not fixed, it will depend on the strike price you choose.
What is a strike price?
The strike is the price of the asset that you assume it will reach and go beyond within the expiration time. You will see the option price there as well, it will be taken into account when the outcome for the deal is calculated.
You may choose a strike that is above or below the current price. What matters is how far the price is from the strike at the moment of expiration. Of course, the direction that you choose is the most important factor, so let’s look into that.
What is Call and Put?
Once you have chosen the strike, you need to decide the direction in which the price will develop in your opinion. This is where the Call and Put buttons play their role.
Click Call if you think that the price will rise or choose Put if you assume that the asset price will fall.
You need to adjust the strike price as well as the position of asset price in relation to the strike you choose will determine your outcome.
Call, Put and their variations
If you are trading on a computer, you will see Higher and Lower instead of Call and Put. The meaning stays the same, Higher is for predictions of the price going up, Lower is for predictions that the price will drop.
On other instruments, like CFDs, Forex, Stocks or Crypto you will see Buy and Sell buttons instead of Higher or Lower. These instruments work in a similar fashion, but there is no expiration time. Still, when opening a deal, you need to make your decision and click Buy if you think that the price of the asset will rise or Sell if you are predicting the price to go down.
Now you know exactly what the Call and Put buttons mean. You are ready to make your decision about the price direction. If you are not sure what to choose, though, do not hesitate to read about technical and fundamental approaches to market analysis and practice before you use your real money.