Calls and Puts are a statutory mode of market and trade. This trade allows the investor to sell stock within a stipulated period of time at a stipulated price.

A Call holder has a right to acquire stock under similar settings.

At the time of the agreement, price levels are determined to activiate the option to purchase. The agreement time frame is usually put in terms of months, rather than weeks or years. At the end of the time frame, the agreement expires. There is a definite limit for the time allowed to trade. Calls and Puts trade in opposite directions.

In describing Calls and Puts, we will assume that an investor purchases Puts with the instruction to purchase stock if the value falls to a specified value. Calls, on the other hand, agree to purchase stock if the value of the stock rises to a certain value. These values are specified in the initial agreement. The value of Calls will go up when the value of the stock rises. Puts will gain in value when the value of the stock falls.

Depending on investoras market projection, one can purchase a Call or Put and benefit from the trade. The major draw back of Calls and Puts investment is that they expire. If not traded before their date of expiry there is a risk of loosing your investment.

The most important thing to remember about Puts and Calls is that the expiration date must be checked with diligence. Even small investors can use this method of trading to make money, but one should not purchase a Put on a self-owned stock.

On the contrary if you purchase a Put from an un-owned stock and then procure that stock prior you can trade the put. In a practical case: if you purchase a Put at a higher price then the there happens to be a supply drop to a lower price, you are at liberty to trade from the out market, i.e. purchase and round trade with a higher price for a profit.

Since the initial stock was purchased at a higher price, with the purchase of the stock on the open market at lower value, the profit can offset any debt incurred with the initial purchase via the Put. It is very important for the investor to understand the limits of each kind of trade. In addition to making investing safer, it will also help explain the fluxuations in the market.

Calls and Puts investing has much to offer the small investor. There are infinite numbers of trades that can occur; it is not necessary to have a large bank account in order to invest in Calls and Puts. As long as the investor is aware of the limits of the technique, Calls and Puts can be a good profit maker.