Puts and Calls: A definition!
The terms "puts" and "calls", in securities trading, refer to contracts
allowing the holder to buy (a call) or sell (a put) a given stock at a specific
price in a designated period of time. Both are options that add flexibility to
the securities market and permit investors to diminish their risks. In return
for executing a put or call, an investor pays a fee to the seller of the option,
who pays a commission to the broker who brought the parties together.
Calls are generally used by investors seeking to profit from a rise in stock
prices while avoiding sharp losses; puts are used to profit from a fall in
stock prices. Both are generally written for one to six months.