From this brief outline of the operation of a put option, it is quite easy to grasp what occurs in the case of a call option. As a matter of fact, call options are much more frequently entered upon by the public than are put options, for the same reason that the public are far more frequently Bulls than Bears. Perhaps it is the optimism of human nature that accounts for this, or perhaps it is the fact that to buy is more natural than to sell, especially when the operator has got nothing to sell. Whatever may be the explanation, some of those who are frequently Bulls themselves regard with horror anything in the nature of a Bear transaction. They buy what they do not want without turning a hair, whilst denouncing as a speculator, dangerous to himself and the community, one who sells what he has not got. They may exercise their judgment in selecting stocks and shares that will rise, but consider it heinous to select those which are likely to fall. In fact, to some minds such selection is tantamount to knocking down the price, to the severe loss of those who hold the securities. We are always hearing of the wicked Bears, but never of the wicked Bulls. In a hazy kind of way, indeed, the Bull with his optimism is supposed to perform a public service. These ideas are perhaps not very sound, but they are at all events natural. All that, however, is a subject for the metaphysician; it suffices here to remark that just as Bull operators are more popular than Bear operators, so are call options more popular than put options. In the case of the call option, the one who buys it thinks the price will rise, and for that reason purchases the right to buy the stock at the existing price some time hence. If he is right he can, when the option period expires, sell the stock at a higher price than that at which he can call it. If he is wrong, and the stock falls, he has only to sacrifice the money he has paid for his call option. However far it may have fallen, he loses no more.
In the case of the option for the put-and-call, the operator buys the right either to sell or buy the certain amount of stock at a certain price on a certain future date. Such options are generally arranged in stocks of a widely fluctuating nature, and the operation partakes more of a gamble, a mere betting upon chance, than do either put options or call options. In these cases the operator has at least an opinion or a belief upon which he lays out his money: in the one case he thinks the stock will fall, and in the other case that it will rise. But in the case of the put-and-call, the only opinion he has is that it will move somehow; he does not know or care which way it moves, provided it moves far enough to show a profit over the amount he has paid for the option. The only question involved is as to whether the price will move widely enough.