Part 9 Trading Master Class

What Are Options?

An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset (like Nifty, Bank Nifty, or a stock) at a fixed price before a specific time.

There are two types of options:

1. Call Option

A call option gives the buyer the right to buy the underlying asset at a fixed price (called the strike price).

You buy a call when you expect price to go up.

Example: If Nifty is at 22,000 and you buy a 22,000 CE (Call Option), you profit if Nifty goes above 22,000 (after covering premium).

2. Put Option

A put option gives the buyer the right to sell the underlying asset at a fixed price.

You buy a put when you expect price to fall.

Example: If Bank Nifty is at 48,000 and you buy 48,000 PE (Put Option), you profit if the price falls below 48,000.