How Option Trading Works
Let’s simplify with an example:
Stock Price: ₹1000
Call Option Strike: ₹1050
Premium: ₹20
Lot Size: 100 shares
If you buy the call option:
Break-even = Strike Price + Premium = ₹1070
If stock goes to ₹1100 → Profit = (1100-1050-20) × 100 = ₹3000
If stock stays below ₹1050 → You lose only the premium = ₹2000
If you sell (write) the call option:
You collect ₹2000 premium upfront.
If stock stays below 1050, you keep the entire premium as profit.
But if stock goes to ₹1100, you face unlimited loss: (1100-1050-20) × 100 = -₹3000.
👉 This shows: Option buyers have limited risk but unlimited profit potential, while sellers have limited profit but unlimited risk.
Let’s simplify with an example:
Stock Price: ₹1000
Call Option Strike: ₹1050
Premium: ₹20
Lot Size: 100 shares
If you buy the call option:
Break-even = Strike Price + Premium = ₹1070
If stock goes to ₹1100 → Profit = (1100-1050-20) × 100 = ₹3000
If stock stays below ₹1050 → You lose only the premium = ₹2000
If you sell (write) the call option:
You collect ₹2000 premium upfront.
If stock stays below 1050, you keep the entire premium as profit.
But if stock goes to ₹1100, you face unlimited loss: (1100-1050-20) × 100 = -₹3000.
👉 This shows: Option buyers have limited risk but unlimited profit potential, while sellers have limited profit but unlimited risk.
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.
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.