Part 1 Intraday Trading Master Class

Key Terms in Option Trading
a) Premium

The cost paid by the buyer to purchase an option contract.
This is the maximum loss for the buyer and the maximum gain for the seller.

b) Strike Price

The fixed price at which a call buyer can buy or a put buyer can sell.

c) Expiry

The date when the option contract expires.
In India:

Indices: Weekly + Monthly expiry

Stocks: Monthly expiry only

d) Lot Size

Options are traded in lots, not single units.
Example: Nifty lot = 50 units.

e) In-the-Money (ITM), At-the-Money (ATM), Out-of-the-Money (OTM)

ITM Call: Spot > Strike

ATM: Spot = Strike

OTM Call: Spot < Strike

Vice-versa for puts.