This article is from the Investing Articles: Stocks and Options series.
Buying a call is the most basic options trading strategy that you can utilize when expecting an upwards price movement in a particular stock. There are many different methods for choosing an underlying security, but when you buy a call, you are essentially saying that you believe that the underlying stock's value will increase before the option's expiration date.
When buying calls:
Just as call buying is the most basic options trading strategy you can employ when expecting upward movement in a stock, put buying is the most basic options trading strategy at your disposal when you expect a stock's value to drop. By purchasing a put, you are investing in the belief that a particular security's value will fall below a certain price by the option's expiration date.
When buying puts: