1. Introduction – What are Options?
Imagine you want to buy a house, but you are not fully sure. The seller says:
“You can pay me ₹1 lakh today as a token, and within the next 3 months you have the right (not obligation) to buy this house for ₹50 lakh. If you don’t buy, I will keep your ₹1 lakh.”
That token money is exactly like an option premium.
If house prices shoot up to ₹60 lakh, you can buy it at ₹50 lakh (huge profit).
If prices fall to ₹40 lakh, you don’t buy, and you only lose ₹1 lakh.
This is the essence of options trading:
Right but not obligation to buy/sell at a fixed price within a fixed time.
Limited loss (premium paid).
Unlimited potential profit.
In stock markets, instead of houses, you deal with shares, indexes, or commodities.
2. How Options Work
Options are part of the derivatives market (value is derived from something else).
Underlying asset: Could be NIFTY, Bank NIFTY, Reliance stock, Gold, etc.
Strike price: Pre-decided price at which you may buy/sell.
Expiry: Fixed date (weekly/monthly).
Premium: Price you pay to buy the option.
Options are of two main types:
Call Option (CE) → Right to buy at a fixed price.
Put Option (PE) → Right to sell at a fixed price.
Imagine you want to buy a house, but you are not fully sure. The seller says:
“You can pay me ₹1 lakh today as a token, and within the next 3 months you have the right (not obligation) to buy this house for ₹50 lakh. If you don’t buy, I will keep your ₹1 lakh.”
That token money is exactly like an option premium.
If house prices shoot up to ₹60 lakh, you can buy it at ₹50 lakh (huge profit).
If prices fall to ₹40 lakh, you don’t buy, and you only lose ₹1 lakh.
This is the essence of options trading:
Right but not obligation to buy/sell at a fixed price within a fixed time.
Limited loss (premium paid).
Unlimited potential profit.
In stock markets, instead of houses, you deal with shares, indexes, or commodities.
2. How Options Work
Options are part of the derivatives market (value is derived from something else).
Underlying asset: Could be NIFTY, Bank NIFTY, Reliance stock, Gold, etc.
Strike price: Pre-decided price at which you may buy/sell.
Expiry: Fixed date (weekly/monthly).
Premium: Price you pay to buy the option.
Options are of two main types:
Call Option (CE) → Right to buy at a fixed price.
Put Option (PE) → Right to sell at a fixed price.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
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면책사항
이 정보와 게시물은 TradingView에서 제공하거나 보증하는 금융, 투자, 거래 또는 기타 유형의 조언이나 권고 사항을 의미하거나 구성하지 않습니다. 자세한 내용은 이용 약관을 참고하세요.
Hello Everyone! 👋
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
Feel free to ask any questions. I'm here to help!
Details:
Contact : +91 7678446896
Email: skytradingmod@gmail.com
WhatsApp: wa.me/7678446896
관련 발행물
면책사항
이 정보와 게시물은 TradingView에서 제공하거나 보증하는 금융, 투자, 거래 또는 기타 유형의 조언이나 권고 사항을 의미하거나 구성하지 않습니다. 자세한 내용은 이용 약관을 참고하세요.