Part 1 Ride The Big Moves

How Option Trading Works

Option trading involves four basic positions:

Buy Call (Long Call): The trader expects the underlying asset’s price to rise.

Sell Call (Short Call): The trader expects the price to stay the same or fall.

Buy Put (Long Put): The trader expects the underlying asset’s price to fall.

Sell Put (Short Put): The trader expects the price to stay the same or rise.

For example, if a trader buys a call option on a stock with a strike price of ₹100 and pays a premium of ₹5, they have the right to buy the stock at ₹100 even if it rises to ₹120. In this case, their profit per share would be ₹15 (₹120 - ₹100 - ₹5). However, if the stock remains below ₹100, they would not exercise the option and would lose only the premium of ₹5.