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For the best experience, please update your browser with the latest version. When you buy a call , you have the right to purchase the underlying instrument at the strike price before the expiration date. Buying a put gives you the right to sell the underlying instrument at the strike price before the expiration date.

Bullish investors tend to purchase calls, while bearish investors tend to buy puts. Alternatively, if you believe the stock's value will decline, you might purchase a put.

Again, subtract the cost of the option from any profit you make. As the option buyer, you control the ability to exercise the contract. However, the stock might not always move in the way that you expect.

Should the price move in the opposite direction, you can do nothing and let the option expire worthless, or you may sell it to prior to expiration to recover part of your purchase price. Options involve risk and are not suitable for all investors.

Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options available at your local Scottrade branch office or from the Options Clearing Corporation at OPTIONS or by visiting www. All option accounts require prior approval by Scottrade.

Market volatility, volume, and system availability may impact account access and trade execution. Supporting documentation for any claims will be supplied upon request. Any specific securities, or types of securities, used as examples are for demonstration purposes only. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security or account.

Such consent is effective at all times when using this site. Brokerage products and services offered by Scottrade, Inc. All investing involves risk. The value of your investment may fluctuate over time, and you may gain or lose money. In this instance, equity is defined as Total Brokerage Account Value minus Recent Brokerage Deposits on Hold. The performance data quoted represents past performance.

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Past performance does not guarantee future results. The research, tools and information provided will not include every security available to the public.

Although the sources of the research tools provided on this website are believed to be reliable, Scottrade makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability or reliability of the information. Information on this website is for informational use only and should not be considered investment advice or recommendation to invest.

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Please consult your tax or legal advisor for questions concerning your personal tax or financial situation. Investors should consider the investment objectives, charges, expense, and unique risk profile of an exchange-traded fund ETF before investing. A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade. The prospectus should be read carefully before investing.

Leveraged and inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies. Investors should monitor these holdings, consistent with their strategies, as frequently as daily.

Investors should consider the investment objectives, risks, charges and expenses of a mutual fund before investing.

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No-transaction-fee NTF funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder or SEC 12b-1 fees. Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market.

It contains information on our lending policies, interest charges, and the risks associated with margin accounts. Consult with your tax advisor for information on how taxes may affect the outcome of these strategies. Keep in mind, profit will be reduced or loss worsened, as applicable, by the deduction of commissions and fees. Market volatility, volume and system availability may impact account access and trade execution.

Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss, in a down market. Third-party websites, research and tools are from sources deemed reliable.

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Text Resize RSS Print. Noncore Investments Determining Your Asset Mix How Many Funds Do You "Need"? How Many Investments Should You Have? How Much Risk Can You Tolerate? Regulatory Trading Suspensions Trading Halts: Buying Options When you buy a call , you have the right to purchase the underlying instrument at the strike price before the expiration date.

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