CE (Call Option) and PE (Put Option) are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price (strike price) on or before a specific date (expiration date). They are used in options trading to speculate on the future price movements of an underlying asset, such as a stock, commodity, or currency.
Call Option (CE) is a contract that gives the holder the right to buy an underlying asset at a specific price (strike price) on or before a specific date (expiration date). They are used by traders who expect the price of the underlying asset to increase in the future. For example, if an investor believes that the price of a stock will increase in the future, they can buy a call option at a strike price that is lower than the current market price. If the price of the stock increases, the investor can exercise the option and buy the stock at the lower strike price, resulting in a profit.
Put Option (PE) is a contract that gives the holder the right to sell an underlying asset at a specific price (strike price) on or before a specific date (expiration date). They are used by traders who expect the price of the underlying asset to decrease in the future. For example, if an investor believes that the price of a stock will decrease in the future, they can buy a put option at a strike price that is higher than the current market price. If the price of the stock decreases, the investor can exercise the option and sell the stock at the higher strike price, resulting in a profit.
Both CE and PE options have an expiration date, and the price of the option is affected by various factors such as the price of the underlying asset, the strike price, the expiration date, and the implied volatility of the underlying asset.
It’s worth noting that options trading can be a high-risk and speculative activity, and it’s essential to conduct thorough research and use other indicators and analysis to make informed trading decisions. It’s also important to understand the risks and rewards associated with options trading and to have a proper understanding of the underlying asset and the options market.