Part 1 Intraday Master Class

Introduction to Option Trading

Option trading is one of the most fascinating and flexible areas in the financial markets. Unlike traditional stock trading — where you buy or sell shares directly — options give you the right but not the obligation to buy or sell an underlying asset (like a stock, index, or commodity) at a fixed price within a specified time.

Think of options as financial contracts that allow traders and investors to speculate on price movements, hedge existing positions, or earn income — all without actually owning the underlying asset.

For example, if you believe Reliance Industries’ stock will go up, instead of buying the shares directly, you can buy a call option — a cheaper contract that benefits if the stock price rises. Conversely, if you expect a fall, you can buy a put option.

The main advantage? Leverage. You control a large position with a relatively small investment. But this also means risk — because options lose value as time passes or if prices move against your expectation.