Type

In options trading, "type" refers to one of the two basic kinds of option contract: a call or a put. Every option that exists is one or the other, and that choice determines the basic right the contract gives its buyer.

A call option gives the buyer the right, but not the obligation, to buy a set number of shares (usually 100 per contract) at a fixed price, called the strike price, before or on a specific expiration date. Traders buy calls when they expect the underlying stock to rise. A put option gives the buyer the right to sell shares at the strike price instead, and is typically bought when a trader expects the stock to fall.

Type is one of several attributes that together fully describe an option contract, alongside the underlying stock, the strike price, and the expiration date. When you look up an option chain, you'll see calls and puts listed side by side for the same stock and expiration, each with its own set of strikes and prices.

The nuance beginners often trip on is confusing "type" with "position." Type (call or put) is fixed at the moment the contract is created and never changes. Position — whether you are buying (long) or selling/writing (short) that contract — is a separate choice you make. So there are really four basic combinations: long call, short call, long put, and short put, each with very different risk profiles, even though there are only two types.