Part 12 Trading Master Class With Experts

How Profit and Loss Works in Options
For Buyers

Profit = (Intrinsic value – Premium paid) × Lot size

Maximum loss = Premium paid

Big profits only occur with sharp directional moves.

For Sellers

Profit = Premium received

Maximum loss = Unlimited (if market moves against you)

Sellers benefit from sideways market and time decay.

Margin Requirements

Option sellers need large margin because risk is high.
Option buyers only pay the premium.

NSE uses SPAN + Exposure for calculating margin.