A buyer of a call option is generally bullish about the security, or in the case of index options, the market. A buyer of a put option, for the right to sell 100 shares of the underlying security at a fixed price before a specified future date, also pays a premium to the writer of the put. A put buyer believes that the price of the underlying security is going to decline. If the put buyer exercises the option, the underlying security shares are sold to the put writer at the option's strike price. A put buyer is generally bearish about the security or the overall market.
Naked options are far riskier.
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