Option trading involves buying and selling options, which are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) before or at the option’s expiration date. The underlying asset can be stocks, bonds, commodities, or other financial instruments.

There are two types of options: call options and put options. A call option gives the holder the right to buy the underlying asset, while a put option gives the holder the right to sell the underlying asset. Traders can use options for various purposes, such as speculation, hedging, or generating income.

Option trading can be categories into two main strategies: buying options (long position) and selling options (short position).

  01. Buying Options (Long Position):-

    Call Option:-

     * A trader buys a call option if they expect the price of the underlying asset to rise.

     * Profits when the underlying asset’s price increases.

     * Limited risk (the premium paid for the option).

     * Unlimited profit potential.

    Put Option:-

     * A trader buys a put option if they expect the price of the underlying asset to fall.

     * Profits when the underlying asset’s price decreases.

     * Limited risk (the premium paid for the option).

     * Unlimited profit potential.

  02. Selling Options (Short Position):-

    Call Option:-

     * A trader sells a call option if they believe the price of the underlying asset will not rise significantly.

     * Profits when the underlying asset’s price remains below the strike price.

     * Limited profit potential (the premium received for selling the option).

     * Unlimited risk if the underlying asset’s price rises significantly.

    Put Option:-

     * A trader sells a put option if they believe the price of the underlying asset will not fall significantly.

     * Profits when the underlying asset’s price remains above the strike price.

     * Limited profit potential (the premium received for selling the option).

     * Unlimited risk if the underlying asset’s price falls significantly.

In summary, option trading involves the buying and selling of options, while option strategies refer to specific combinations of options contracts that traders use to achieve particular objectives. The strategies can involve multiple options with different strike prices and expiration dates, and they are designed to manage risk, generate income, or capitalise on market expectations.

     

Nifty option buying service details:-

• Risk reward ratio is minimum 1:3 or more
• Pro trader club provide you only high probability trade
• Pro trader club can provide you trading calls anytime during the market hours
• Pro trader club will also share the reasons why to take this trade
• Minimum capital requirement Rs. 100000/- only
• Monthly fee Rs. 2999/- only
Note:- There will be a discount of Rs. 499/- only for those who open in account with Upstox thru my referral link.