Call and put options are two types of financial contracts traded in the options market. Both types of options give the buyer the right, but not the obligation, to buy or sell a particular asset (usually stocks, but also currencies, commodities, and other financial instruments) at a predetermined price, called the strike price, on or before a specific date, called the expiration date.

A call option gives the buyer the right to buy an underlying asset at a specific strike price within a certain time period. If the price of the underlying asset increases above the strike price, the buyer can exercise the option and buy the asset at the lower strike price, then sell it at the higher market price, making a profit. If the price of the underlying asset does not increase above the strike price, the buyer may choose not to exercise the option and let it expire, losing the premium paid for the option.

A put option, on the other hand, gives the buyer the right to sell an underlying asset at a specific strike price within a certain time period. If the price of the underlying asset falls below the strike price, the buyer can exercise the option and sell the asset at the higher strike price, then buy it at the lower market price, making a profit. If the price of the underlying asset does not fall below the strike price, the buyer may choose not to exercise the option and let it expire, losing the premium paid for the option.

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