The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “Why are calls more expensive than puts?” Now, we actually generally don’t see that call options all the time are more expensive than put options. In fact, many times, you’ll see that most of the skew in pricing or the differential in pricing happens on the put side where put options are more expensive than the same or relative call options at an equal distance from the market and that’s because most times, people are more concerned with downside risk and they’re willing to use put options to protect against that downside risk. As volatility starts to increase, that typically is followed by market moves lower. Not all the time, but typically, it’s followed by a market move lower. Where you do see situations where the whole skew starts to flip and you see call options become more expensive than put options, usually follows with a lot of speculation. Right now is a great example