Example: If buyers are bullish and expect the stock price to rise above the strike price before expiry, they can exercise the option to buy at the lower strike and sell at the market price for profit.

Example: The profit is calculated as strike price minus market price, minus the premium and expenses, multiplied by the number of contracts (x100 shares per contract). Risk is limited to the premium paid if the option expires worthless.

Example: If the stock price rises above the strike, the seller must sell shares at the lower strike price, potentially incurring significant or even unlimited losses. This makes writing calls much riskier than buying calls.

Example: If the stock falls below the strike, the seller is obligated to buy shares at the higher strike price, leading to losses. The risk depends on how far the stock depreciates, and losses can be significant.