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Part 1 Trading Master ClassIntroduction to Options Trading Imagine you want to buy a house. You like one particular property, but you don’t want to commit right away. Instead, you tell the seller: "Here’s ₹1 lakh. Keep this house reserved for me for the next 6 months. If I decide to buy, I’ll pay you the agreed price. If not, you can keep this ₹1 lakh." That ₹1 lakh you gave is called a premium. The deal you made is an option — a contract that gives you the right but not the obligation to buy the house. This is the core idea of options trading: you pay a small premium to get the right to buy or sell something (like stocks, indexes, commodities, etc.) at a fixed price in the future. What is an Option? An option is a contract between two parties: Buyer of option (the one who pays the premium). Seller of option (the one who receives the premium). The buyer has the right (but not obligation) to buy or sell at a certain price. The seller has the obligation to fulfill the deal if the buyer exercises the option. Key Terms: Underlying Asset → The thing on which the option is based (stocks like Reliance, Infosys, indexes like Nifty, commodities, etc.). Strike Price → The pre-decided price at which the buyer can buy or sell. Premium → The cost of buying the option. Expiry → The last date till which the option is valid. Lot Size → Options are traded in fixed quantities, not single shares. Example: Nifty options lot = 50 shares.
NSE:BANKNIFTYEducation
by SkyTradingZone
Part 2 Master Candlestick PatternDisadvantages of Options Complexity for beginners Time decay risk (premium can vanish) Unlimited risk for sellers of uncovered options Requires active monitoring for effective trading Tips for Successful Options Trading Understand the underlying asset thoroughly. Start with basic strategies like long calls, puts, and covered calls. Use proper risk management and position sizing. Keep track of Greeks to understand sensitivity. Avoid over-leveraging. Monitor market volatility; high volatility can inflate premiums. Use demo accounts or paper trading for practice.
NSE:KOTAKBANKEducation
by SkyTradingZone
3
Part 6 Learn Institutional Trading Black-Scholes Model A widely used formula to calculate option prices using: Stock price Strike price Time to expiry Volatility Risk-free interest rate Greeks Delta: Measures sensitivity of option price to underlying price changes. Gamma: Measures delta’s rate of change. Theta: Measures time decay of option. Vega: Measures sensitivity to volatility. Rho: Measures sensitivity to interest rates. Understanding Greeks is critical for managing risk and strategy adjustments.
NSE:BANKNIFTY1!Education
by SkyTradingZone
4
Part 4 Learn Institutional Trading Advanced Strategies Straddle: Buy a call and a put at the same strike and expiry to profit from volatility. Strangle: Buy OTM call and put for cheaper volatility bets. Spread Strategies: Combine multiple calls or puts to limit risk and reward: Bull Call Spread: Buy call at lower strike, sell call at higher strike. Bear Put Spread: Buy put at higher strike, sell put at lower strike. Iron Condor: Combine calls and puts to profit from low volatility. Butterfly Spread: Profit from minimal movement around a central strike. Pricing of Options Option pricing is influenced by several factors: Intrinsic Value The real value if exercised today. Call option IV = Max(Current Price – Strike, 0) Put option IV = Max(Strike – Current Price, 0) Time Value Extra premium due to time until expiration. TV = Option Premium – Intrinsic Value
NSE:TCSEducation
by SkyTradingZone
4
Part 1 Ride The Big Moves Options trading is one of the most versatile tools in financial markets, allowing traders and investors to hedge risk, generate income, and speculate on price movements. While options can seem complex at first, understanding their structure, types, and strategies can make them an invaluable part of your trading toolkit. What Are Options? An option is a financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset (like stocks, indices, or commodities) at a predetermined price within a specific period. Unlike futures or stocks, options provide flexibility and limited risk. There are two main types of options: Call Option: Gives the buyer the right to buy the underlying asset at a predetermined price (strike price) before or on the expiration date. Put Option: Gives the buyer the right to sell the underlying asset at the strike price before or on expiration. Key terms to understand: Underlying Asset: The stock, index, commodity, or currency on which the option is based. Strike Price: The price at which the option can be exercised. Premium: The price paid to buy the option. Expiration Date: The date on which the option expires. In-the-Money (ITM): Options with intrinsic value (profitable if exercised now). Out-of-the-Money (OTM): Options without intrinsic value (currently unprofitable). At-the-Money (ATM): Option strike price equals the underlying asset price.
TVC:IN10YEducation
by SkyTradingZone
4
Part 1 Trading Master Class With ExpertsIntermediate Option Strategies Straddle – Buy Call + Buy Put (same strike/expiry). Best for high volatility. Strangle – Buy OTM Call + Buy OTM Put. Cheaper than straddle. Bull Call Spread – Buy lower strike call + Sell higher strike call. Bear Put Spread – Buy higher strike put + Sell lower strike put. Advanced Option Strategies Iron Condor – Sell OTM call + OTM put, hedge with farther strikes. Good for sideways market. Butterfly Spread – Combination of multiple calls/puts to profit from low volatility. Calendar Spread – Buy long-term option, sell short-term option (same strike). Ratio Spread – Sell multiple options against fewer long options. Hedging with Options Options aren’t just for speculation; they’re powerful hedging tools. Portfolio Hedge: If you own a basket of stocks, buying index puts protects against a market crash. Currency Hedge: Importers/exporters use currency options to lock exchange rates. Commodity Hedge: Farmers hedge crops using options to lock minimum prices.
NSE:RELIANCEEducation
by SkyTradingZone
2
Part 1 Support and ResistanceCall and Put Options in Action Call Option Example Reliance is trading at ₹2500. You buy a 1-month call option with strike price ₹2550, premium ₹50, lot size 505. If Reliance rises to ₹2700 → Profit = (2700 - 2550 - 50) × 505 = ₹50,500. If Reliance falls below 2550 → You lose only the premium (₹25,250). Put Option Example Nifty is at 20,000. You buy a 1-month put option, strike 19,800, premium 100, lot size 50. If Nifty falls to 19,200 → Profit = (19,800 - 19,200 - 100) × 50 = ₹25,000. If Nifty rises above 19,800 → You lose premium (₹5,000). Participants in Options Trading Option Buyer – Pays premium, has limited risk and unlimited profit potential. Option Seller (Writer) – Receives premium, has limited profit and potentially unlimited risk. Example: Buyer of call: Unlimited upside, limited loss (premium). Seller of call: Limited profit (premium), unlimited loss if stock rises.
OKX:BTCUSDEducation
by SkyTradingZone
2
Divergence SecretsOption Greeks – The Science Behind Pricing Options pricing is influenced by multiple factors. These sensitivities are known as the Greeks: Delta – Measures how much option price changes with stock price. Gamma – Rate of change of Delta. Theta – Time decay (options lose value daily). Vega – Sensitivity to volatility. Rho – Sensitivity to interest rates. Example: A call option with Delta = 0.6 means for every ₹10 rise in stock, option premium increases by ₹6. Basic Option Strategies (Beginner Level) Buying Calls – Bullish bet. Buying Puts – Bearish bet. Covered Call – Hold stock + sell call for extra income. Protective Put – Own stock + buy put for downside insurance.
NSE:KOTAKBANKEducation
by SkyTradingZone
2
Option Trading 1. Introduction to Options Trading Options trading is one of the most powerful tools in the financial markets. Unlike traditional stock trading, where you buy or sell shares directly, options allow you to control an asset without owning it outright. This gives traders flexibility, leverage, and a wide range of strategies for both profits and risk management. At its core, an option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price (called the strike price) on or before a certain date (the expiration date). The beauty of options lies in choice: you can profit whether markets are rising, falling, or even staying flat—if you know how to use them. 2. What is an Option? An option is a derivative instrument, meaning its value is derived from the price of another asset (the “underlying”), such as: Stocks (e.g., Reliance, Apple) Indexes (e.g., Nifty, S&P 500) Commodities (e.g., Gold, Oil) Currencies Two Main Types of Options: Call Option – Gives the right to buy the underlying asset. Put Option – Gives the right to sell the underlying asset. Example: A call option on Reliance with a strike price of ₹2500 expiring in one month gives you the right (not the obligation) to buy Reliance shares at ₹2500, regardless of the market price. A put option with a strike of ₹2500 gives you the right to sell at ₹2500.
NSE:ICICIBANKEducation
by SkyTradingZone
2
Trading Master Class With ExpertsTips for Beginners in Options Trading Start with buying calls/puts before selling. Trade liquid instruments like Nifty/Bank Nifty. Learn Greeks slowly, don’t jump into complex strategies. Avoid naked option selling without hedging. Paper trade before risking real capital. Role of Volatility in Options Volatility is the lifeblood of options. High Volatility = Expensive Premiums. Low Volatility = Cheap Premiums. Traders often use Implied Volatility (IV) to decide whether to buy (when IV is low) or sell (when IV is high). Mastering Options Options are like a Swiss Army Knife of trading—one tool with multiple uses: speculation, hedging, and income generation. But with great power comes great responsibility. To succeed in options trading: Understand the basics thoroughly. Start small and simple. Master risk management. Use strategies suited to your market outlook. Keep emotions under control. With practice and discipline, options can become a game-changer in your trading journey.
NSE:KOTAKBANKEducation
by SkyTradingZone
2
Part 6 Learn Institutional TradingOptions in Indian Markets In India, options are traded on NSE and BSE, primarily on: Index Options: Nifty, Bank Nifty (most liquid). Stock Options: Reliance, TCS, Infosys, etc. Weekly Expiry: Every Thursday (Nifty/Bank Nifty). Lot Sizes: Fixed by exchanges (e.g., Nifty = 50 units). Practical Example – Nifty Options Trade Scenario: Nifty at 20,000. You expect big movement after RBI policy. Strategy: Buy straddle (20,000 call + 20,000 put). Cost = ₹200 (call) + ₹180 (put) = ₹380 × 50 = ₹19,000. If Nifty moves to 20,800 → Call worth ₹800, Put worthless. Profit = ₹21,000. If Nifty stays at 20,000 → Both expire worthless. Loss = ₹19,000. Option Trading Psychology Patience: Many options expire worthless, don’t chase every trade. Discipline: Stick to stop-loss and position sizing. Avoid Greed: Sellers earn small consistent income but risk blow-up if careless. Stay Informed: News, earnings, and events impact volatility.
BSE:SENSEXEducation
by SkyTradingZone
Part 1 Ride The Big Moves Call and Put Options in Action Call Option Example Reliance is trading at ₹2500. You buy a 1-month call option with strike price ₹2550, premium ₹50, lot size 505. If Reliance rises to ₹2700 → Profit = (2700 - 2550 - 50) × 505 = ₹50,500. If Reliance falls below 2550 → You lose only the premium (₹25,250). Put Option Example Nifty is at 20,000. You buy a 1-month put option, strike 19,800, premium 100, lot size 50. If Nifty falls to 19,200 → Profit = (19,800 - 19,200 - 100) × 50 = ₹25,000. If Nifty rises above 19,800 → You lose premium (₹5,000). Participants in Options Trading Option Buyer – Pays premium, has limited risk and unlimited profit potential. Option Seller (Writer) – Receives premium, has limited profit and potentially unlimited risk. Example: Buyer of call: Unlimited upside, limited loss (premium). Seller of call: Limited profit (premium), unlimited loss if stock rises.
TVC:GOLDEducation
by SkyTradingZone
Part 2 Master Candlestick PatternKey Terms in Options Trading Before diving into strategies, let’s master some core concepts: Underlying Asset: The stock/index/commodity on which the option is based. Strike Price: The price at which the option can be exercised. Expiration Date: The date on which the option contract ends. Premium: The price paid by the option buyer to the seller (writer) for the contract. In-the-Money (ITM): Option has intrinsic value (profitable if exercised). At-the-Money (ATM): Underlying price = Strike price. Out-of-the-Money (OTM): Option has no intrinsic value yet (not profitable to exercise). Lot Size: Options are traded in lots (e.g., Nifty option has a fixed lot of 50 units). Leverage: Options allow control of large positions with smaller capital. How Options Work Options are like insurance. Imagine you own a house worth ₹50 lakh and buy insurance. You pay a small premium so that if the house burns down, you can recover your value. Similarly: A call option is like paying for the right to buy a stock cheaper later. A put option is like insurance against stock prices falling.
NSE:RELIANCEEducation
by SkyTradingZone
Part 1 Master Candlestick PatternIntroduction to Options Trading Options trading is one of the most powerful tools in the financial markets. Unlike traditional stock trading, where you buy or sell shares directly, options allow you to control an asset without owning it outright. This gives traders flexibility, leverage, and a wide range of strategies for both profits and risk management. At its core, an option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price (called the strike price) on or before a certain date (the expiration date). The beauty of options lies in choice: you can profit whether markets are rising, falling, or even staying flat—if you know how to use them. What is an Option? An option is a derivative instrument, meaning its value is derived from the price of another asset (the “underlying”), such as: Stocks (e.g., Reliance, Apple) Indexes (e.g., Nifty, S&P 500) Commodities (e.g., Gold, Oil) Currencies Two Main Types of Options: Call Option – Gives the right to buy the underlying asset. Put Option – Gives the right to sell the underlying asset. Example: A call option on Reliance with a strike price of ₹2500 expiring in one month gives you the right (not the obligation) to buy Reliance shares at ₹2500, regardless of the market price. A put option with a strike of ₹2500 gives you the right to sell at ₹2500.
NSE:COALINDIAEducation
by SkyTradingZone
Part3 Trading MasterclassOption Trading vs Stock Trading Stocks = Ownership, long-term growth, dividends. Options = Contracts, leverage, flexible strategies. Stocks = Simpler, but capital-intensive. Options = Complex, but require less capital and offer hedging. For example: Buying 100 shares of Reliance at ₹2500 = ₹2,50,000. Buying 1 call option of Reliance at ₹100 premium with lot size 250 = only ₹25,000. This leverage makes options attractive—but also riskier. Real-Life Examples & Case Studies Case 1: Bull Market A trader buys Nifty 20000 Call at ₹200 premium. Nifty rallies to 20500. Profit = ₹300 (500 – 200). Huge return on a small premium. Case 2: Bear Market Investor holds TCS shares but fears a fall. Buys a protective put. When stock drops, put increases in value, reducing losses. Case 3: Neutral Market Trader sells an Iron Condor on Bank Nifty, betting price will stay range-bound. Premium collected = profit if market stays sideways.
NSE:TCSEducation
by SkyTradingZone
7
Part 1 Trading MasterclassRisks & Rewards in Option Trading Option trading can be thrilling, but it’s not without risks. For Buyers: Maximum loss = premium paid. Maximum profit = potentially unlimited (for calls) or huge (for puts). For Sellers: Maximum gain = premium received. Maximum loss = unlimited (for calls) or very large (for puts). Risks also come from: Time decay (options lose value daily). Volatility crush (sudden drop in implied volatility can reduce premiums). Liquidity issues (wide bid-ask spreads can hurt execution). That’s why risk management (stop-losses, proper sizing, hedging) is crucial. Option Trading vs Stock Trading Stocks = Ownership, long-term growth, dividends. Options = Contracts, leverage, flexible strategies. Stocks = Simpler, but capital-intensive. Options = Complex, but require less capital and offer hedging. For example: Buying 100 shares of Reliance at ₹2500 = ₹2,50,000. Buying 1 call option of Reliance at ₹100 premium with lot size 250 = only ₹25,000. This leverage makes options attractive—but also riskier.
BSE:SENSEXEducation
by SkyTradingZone
6
Divergence SecretsRisks & Rewards in Option Trading Option trading can be thrilling, but it’s not without risks. For Buyers: Maximum loss = premium paid. Maximum profit = potentially unlimited (for calls) or huge (for puts). For Sellers: Maximum gain = premium received. Maximum loss = unlimited (for calls) or very large (for puts). Risks also come from: Time decay (options lose value daily). Volatility crush (sudden drop in implied volatility can reduce premiums). Liquidity issues (wide bid-ask spreads can hurt execution). That’s why risk management (stop-losses, proper sizing, hedging) is crucial. Option Trading vs Stock Trading Stocks = Ownership, long-term growth, dividends. Options = Contracts, leverage, flexible strategies. Stocks = Simpler, but capital-intensive. Options = Complex, but require less capital and offer hedging. For example: Buying 100 shares of Reliance at ₹2500 = ₹2,50,000. Buying 1 call option of Reliance at ₹100 premium with lot size 250 = only ₹25,000. This leverage makes options attractive—but also riskier.
TVC:IN10YEducation
by SkyTradingZone
5
Option Trading Option Pricing & The Greeks Options are not priced randomly. Their value comes from several factors: Intrinsic Value: The real, tangible value (difference between stock price and strike). Time Value: Extra premium paid for the possibility of future movement. Volatility: The higher the uncertainty, the higher the option premium. Option Greeks – the essential toolkit: Delta – Measures how much an option’s price changes with a change in stock price. (Think: sensitivity to price). Gamma – Measures how much Delta itself changes. Theta – Time decay. Shows how much an option loses value each day as expiration approaches. Vega – Sensitivity to volatility. Higher volatility = higher option price. Rho – Sensitivity to interest rates (less relevant for short-term traders). Understanding Greeks is like knowing the gears of a car—they help control risk. Option Trading Strategies Here’s where things get exciting. Options are like Lego blocks—you can combine them in different ways to create powerful strategies. A. Basic Strategies Buying Calls – Bullish bet. Buying Puts – Bearish bet. Covered Call – Holding a stock and selling calls to earn income. Protective Put – Owning stock and buying puts to insure against loss. B. Intermediate Strategies Straddle – Buy a call + put at same strike, betting on big movement (either direction). Strangle – Similar to straddle but different strikes, cheaper. Bull Call Spread – Buy one call, sell a higher strike call. Profits capped but cheaper. Bear Put Spread – Buy a put, sell lower strike put. C. Advanced Strategies Iron Condor – Selling an OTM call spread + OTM put spread, betting on low volatility. Butterfly Spread – Combining multiple options to profit if stock stays near a target price. Calendar Spread – Exploiting time decay by selling short-term and buying long-term options. Each strategy has a risk-reward profile and works best in specific market conditions.
NSE:COALINDIAEducation
by SkyTradingZone
7
Part 2 Support and ResistanceHow Options Work Let’s break it down simply: If you buy a call, you are betting that the price of the stock will go up. If you buy a put, you are betting that the price of the stock will go down. If you sell (write) a call, you are taking the opposite bet—that the stock won’t rise much. If you sell (write) a put, you are betting that the stock won’t fall much. Here’s a quick example: Stock XYZ trades at ₹100. You buy a 1-month call option with a strike price of ₹105 by paying a ₹5 premium. If the stock rises to ₹120, your option is worth ₹15 (120 – 105). Since you paid ₹5, your profit = ₹10. If the stock stays below ₹105, the option expires worthless, and you lose your premium of ₹5. This example shows that options can magnify profits if you’re right, but they can also cause losses (limited to the premium paid for buyers, unlimited for sellers). Types of Options A. Call Options Right to buy. Used when you expect prices to rise. Buyers have limited risk (premium) but unlimited upside. Sellers (writers) have limited gain (premium received) but unlimited risk. B. Put Options Right to sell. Used when you expect prices to fall. Buyers have limited risk but big upside if stock falls sharply. Sellers have limited gain (premium) but large risk if stock collapses.
NSE:TATASTEELEducation
by SkyTradingZone
5
Part 1 Support and Resistance1. Introduction to Options In the world of financial markets, traders and investors use various tools to manage risk, speculate on price movements, or generate additional income. One of the most powerful and flexible tools is options trading. An option is a financial derivative, which means its value is derived from another underlying asset. This underlying asset could be a stock, an index, a commodity, or even a currency. Unlike stocks, where you own a piece of the company, an option is a contract that gives you certain rights related to buying or selling the underlying asset at a specific price and within a specified time. Options are incredibly versatile. Traders use them for hedging (protection against loss), speculation (betting on future price moves), or income generation (selling options for premiums). But with great flexibility comes complexity, and that’s why understanding option trading deeply is essential before jumping in. 2. Basic Terminology in Option Trading Before diving deep, let’s clear some essential terms: Call Option: A contract giving the right (not obligation) to buy an asset at a predetermined price (strike price) before expiration. Put Option: A contract giving the right (not obligation) to sell an asset at a predetermined price before expiration. Strike Price: The fixed price at which the option holder can buy (for calls) or sell (for puts) the underlying. Premium: The cost of purchasing an option contract. This is the price paid upfront by the buyer to the seller (writer). Expiration Date: The date when the option contract expires. After this, the option becomes worthless if not exercised. In the Money (ITM): An option that has intrinsic value. For calls, when the stock price > strike price. For puts, when stock price < strike price. Out of the Money (OTM): An option with no intrinsic value (only time value). For calls, stock price < strike price. For puts, stock price > strike price. At the Money (ATM): When the stock price and strike price are roughly equal. Option Writer: The seller of the option contract. They receive the premium but take on obligation. Lot Size: Options are traded in fixed quantities called lots (e.g., 50 or 100 shares per contract depending on the market). Understanding these terms is like learning the alphabet before writing sentences—you need them to progress.
NSE:BANKNIFTYEducation
by SkyTradingZone
5
Part 4 Institutional Trading Types of Option Strategies Here’s the heart of the discussion: strategies. Single-Leg Strategies (Simple & Beginner-Friendly) a) Long Call (Buying a Call) View: Bullish Risk: Limited to premium paid Reward: Unlimited (theoretically) Example: Buy Reliance 2800 CE @ ₹50 → If Reliance goes to 2900, profit = ₹50. b) Long Put (Buying a Put) View: Bearish Risk: Limited to premium paid Reward: Large downside profit potential Example: Buy Nifty 22,000 PE → If Nifty falls, profit rises. c) Covered Call View: Neutral to mildly bullish How it works: Hold stock + Sell a Call option Goal: Earn income from option premium Risk: Stock falls significantly. d) Cash-Secured Put View: Neutral to bullish How it works: Sell a Put with enough cash to buy stock if assigned. Goal: Collect premium or buy stock cheaper.
NSE:ICICIBANKEducation
by SkyTradingZone
6
Part 2 Ride The Big MovesBasics of Options Before jumping into strategies, let’s revisit some fundamentals: Call Option: Gives the buyer the right to buy the asset at a specific strike price. Put Option: Gives the buyer the right to sell the asset at a specific strike price. Option Premium: The price paid to buy an option. Strike Price: The price at which the underlying can be bought/sold. Expiry Date: The last date the option can be exercised. ITM (In-the-Money): Option has intrinsic value (profitable if exercised). OTM (Out-of-the-Money): Option has no intrinsic value (not profitable if exercised). ATM (At-the-Money): Strike price is very close to current market price. 💡 Quick Example: Nifty is at 22,000. You buy a 22,000 Call Option for ₹200 premium. If Nifty rises to 22,500, your option has value (ITM). If Nifty stays flat or goes down, you may lose the premium. Now, depending on whether you buy or sell Calls/Puts, you can build hundreds of strategies. Why Traders Use Options Options are powerful because they can serve three main purposes: Hedging – Protecting an existing portfolio from adverse price moves. Example: A long-term investor holding Infosys shares may buy a Put option to protect against a fall. Speculation – Betting on market direction with limited capital. Example: Buying a Call if you expect bullish momentum. Income Generation – Selling options to collect premium regularly. Example: Writing Covered Calls on stocks you own. The same instrument (options) can be used very differently by traders with different goals. That’s why strategies matter.
NSE:RELIANCEEducation
by SkyTradingZone
5
Part 2 Candle Stick Pattern Introduction to Options Trading In the world of financial markets, traders are always looking for ways to manage risk, generate income, or profit from price movements. Stocks, bonds, and futures are common instruments, but options trading adds a completely new layer of flexibility. An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price (called the strike price) on or before a certain date (called the expiry date). Unlike stocks, which represent ownership in a company, options are derivative contracts—their value is derived from the movement of an underlying asset such as Nifty, Bank Nifty, Reliance Industries, Tesla, Gold, Crude Oil, etc. The beauty of options is that they allow traders to benefit in bullish, bearish, or even sideways markets, depending on the strategy used. That’s why understanding option trading strategies is like learning the different moves in a chess game—you pick the right one for the right situation. Basics of Options Before jumping into strategies, let’s revisit some fundamentals: Call Option: Gives the buyer the right to buy the asset at a specific strike price. Put Option: Gives the buyer the right to sell the asset at a specific strike price. Option Premium: The price paid to buy an option. Strike Price: The price at which the underlying can be bought/sold. Expiry Date: The last date the option can be exercised. ITM (In-the-Money): Option has intrinsic value (profitable if exercised). OTM (Out-of-the-Money): Option has no intrinsic value (not profitable if exercised). ATM (At-the-Money): Strike price is very close to current market price. 💡 Quick Example: Nifty is at 22,000. You buy a 22,000 Call Option for ₹200 premium. If Nifty rises to 22,500, your option has value (ITM). If Nifty stays flat or goes down, you may lose the premium. Now, depending on whether you buy or sell Calls/Puts, you can build hundreds of strategies.
BSE:SENSEXEducation
by SkyTradingZone
5