Calls vs Puts Explained: Which One Should You Buy?

Two types of options. That's it. Here's exactly how to think about each one.

Call Options — Betting the Stock Goes Up

A call option gives you the right to buy 100 shares of a stock at the strike price before expiration.

You buy a call when you believe:

• The stock price is about to move higher
• The stock is oversold and positioned to bounce
• There's a technical setup (gap fill, support level) pointing upward
• A catalyst is coming that will drive the stock up

How calls make money: If you buy a PYPL $42 call and PYPL rises from $42 to $47, your call option's value increases significantly because it now represents the right to buy a stock for $42 that's actually worth $47. That built-in profit makes your contract more valuable.

Put Options — Betting the Stock Goes Down

A put option gives you the right to sell 100 shares at the strike price before expiration.

You buy a put when you believe:

• The stock is overvalued and headed lower
• You want to hedge (protect) an existing stock position
• Technical signals show a breakdown is coming

TarsierAlpha's Approach: Calls Only

At TarsierAlpha, our three core strategies — Gap Fill, Oversold Bounce, and Catalyst Play — all involve buying call options on quality companies.

Here's why:

• Quality large-cap stocks have defined floors (they don't go to zero)
• When fear drives them down, the bounce is explosive and fast
• Call premiums are cheapest when the stock is most beaten down
• The risk/reward is asymmetric in our favor

We don't short stocks. We don't buy puts. We find quality companies at extreme lows, buy cheap calls, and ride the bounce.

Calls vs Puts — Quick Reference