All the risk of loss is also to the downside, due to the fact that the investor is obligated to
buy the stock at the strike price.
If the call buyer does not exercise his or her right to buy the stock before the predetermined time, the options contract expires and the opportunity to
buy the stock at the strike price will cease to exist.
The buyer of an option is not obligated to
buy the stock at the strike price; he just has a right to do so if he chooses.
The writer is then required to
buy the stock at the strike price.
In call options, it's the exact opposite: buyers of the call option have the right to
buy stock at the strike price.
In a long call, you have the right to
buy the stock at the strike price.
You are obligated to
buy the stock at the strike price.
If you sell a put, you must
buy the stock at the strike price.
When you use the long call strategy, you buy the right to
buy a stock at the strike price.
The seller (or writer) of the put option is obligated to
buy the stock at the strike price.
However, if the price of the stock drops below the strike price, you'll be forced to
buy the stock at the strike price.
When you start vesting options, you can choose to
buy stock at the strike price.
A call option gives the buyer the right to
buy a stock at the strike price any time before the expiration date.