DEFINITION of 'Put On A Call'
One of the four types of compound options, this is a "put" option on an underlying "call" option. The buyer of a put on a call has the right but not the obligation to sell the underlying call option on the expiration date. This type of option is used when leverage is desired, and the trader is bearish on the underlying asset. The value of a put on a call changes in inverse proportion to the price of the underlying asset, i.e. it decreases as the asset price increases, and increases as the asset price decreases. Also known as a splitfee option.
BREAKING DOWN 'Put On A Call'
A put on a call has two strike prices and two expiration dates, one for the initial put option and the other for the underlying call option. Note that compound options are generally Europeanstyle exercise, which means that they can only be exercised on the expiration date.
Since one of the variables that determines the cost of an option is the price of the underlying asset, the cost of a put on a call option will generally be much lower than the cost of a put on the corresponding asset. It can therefore provide a great deal of leverage to the options trader.

Put On A Put
One of the four types of compound options, this is a put option ... 
Compound Option
An option for which the underlying is another option. Therefore, ... 
Call On A Put
One of the four types of compound options, this is a call option ... 
Call On A Call
A type of compound option in which the investor has the right ... 
Exotic Option
An option that differs from common American or European options ... 
In The Money
1. For a call option, when the option's strike price is below ...

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How are call options priced?
Learn how aspects of an underlying security such as stock price and potential for fluctuations in that price, affect the ... Read Answer >> 
Are put options more difficult to trade than call options?
Learn about the difficulty of trading both call and put options. Explore how put options earn profits with underlying assets ... Read Answer >> 
When is a call option considered to be "in the money"?
Learn about call options, their intrinsic values and why a call option is in the money when the underlying stock price is ... Read Answer >> 
When holding an option through expiration date, are you automatically paid any profits, ...
Holding an option through the expiration date without selling does not automatically guarantee you profits, but it might ... Read Answer >> 
When is a put option considered to be "in the money"?
Learn about put options, what they are, how these financial derivatives operate and when put options are considered to be ... Read Answer >> 
How do I change my strike price once the trade has been placed already?
Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >>