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KembaraXtra – Islamic Derivatives: Which Is More Profitable — Call Option or Put Option?
🔹 Short Answer
👉 Neither is always more profitable.
It depends on how the market moves.
🔹 Key Idea You Need to Fix
You said:
“Call option only buy at strike price”
⚠️ Actually:
👉 Both involve buying and selling, just in different order.
🔹 When Call Option Is More Profitable 📈
Use a call option when you expect price to go up.
Example:
👉 Profit = RM500 − premium
✔ Big price increase → high profit
🔹 When Put Option Is More Profitable 📉
Use a put option when you expect price to go down.
Example:
👉 Profit = RM500 − premium
✔ Big price decrease → high profit
🔹 Important Comparison
👉 Profit depends on:
🔹 Which One Gives More Profit?
👉 They can give the same profit if price moves equally.
Example:
✔ So they are symmetrical
🔹 The Real Difference
👉 The “more profitable” one is simply the one that matches market direction
🔹 Simple Summary
🔹 Short Answer
👉 Neither is always more profitable.
It depends on how the market moves.
🔹 Key Idea You Need to Fix
You said:
“Call option only buy at strike price”
⚠️ Actually:
- Call option → buy at strike price, then you can sell at market price
- Put option → buy at market price, then sell at strike price
👉 Both involve buying and selling, just in different order.
🔹 When Call Option Is More Profitable 📈
Use a call option when you expect price to go up.
Example:
- Strike = RM4,000
- Price rises to RM4,500
👉 Profit = RM500 − premium
✔ Big price increase → high profit
🔹 When Put Option Is More Profitable 📉
Use a put option when you expect price to go down.
Example:
- Strike = RM4,000
- Price drops to RM3,500
👉 Profit = RM500 − premium
✔ Big price decrease → high profit
🔹 Important Comparison
- Call option profits from price increase
- Put option profits from price decrease
👉 Profit depends on:
- How much price moves
- Direction of movement
🔹 Which One Gives More Profit?
👉 They can give the same profit if price moves equally.
Example:
- Price goes up RM500 → call profit = RM500
- Price goes down RM500 → put profit = RM500
✔ So they are symmetrical
🔹 The Real Difference
- Call → bullish (expect price ↑)
- Put → bearish (expect price ↓)
👉 The “more profitable” one is simply the one that matches market direction
🔹 Simple Summary
- No option is always better ❌
- Call = profit when price goes up 📈
- Put = profit when price goes down 📉
- Profit depends on correct prediction, not type
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